The PayInc Economic Index, which tracks the monthly value of electronic transactions cleared through PayInc, improved in February 2026 – signalling signs of an economic recovery.
However, the economic outlook for the year remains fragile as the Iran war is expected to introduce downside risks through rising cost pressures, disrupted supply chains, and increased global uncertainty.
“The PayInc Economic Index increased by 0,4% to reach an index level of 103.9 in February,” says Shergeran Naidoo, head of Stakeholder Engagements at PayInc. “At 3,5% above year-ago levels, the index signalled resilience in economic activity at the beginning of the year.”
The number of transactions cleared through PayInc in February was 177,9-million, slightly higher than 177,8-million in January and 12,5% higher year-on-year. A mixed performance was noted across the payment streams as cash supply to banks, also included in the PayInc Economic Index, continued its moderating trend in February.
According to Naidoo, the nominal value of electronic transactions rose to R1,33-trillion, compared to R1,25-trillion in January 2026.
The war’s rapid economic impact – fuel prices, CPI and rising retail costs
The US-Israel war against Iran, which started on 28 February, has abruptly reversed the improving economic scenario predicted for South Africa and the rest of the world.
“Our previous report, which outlined the economy’s prospects for 2026, highlighted risks such as geopolitical tensions, trade uncertainties, and political reshuffling that could disrupt the outlook,” says independent economist, Elize Kruger. “However, a full-blown war was not anticipated.
“While the full impact is impossible to predict, given that no one knows how long the war will last, it is increasingly clear that even a relatively short duration could have ripple effects on global and local economic prospects in the months to come,” she adds.
According to Kruger, the most immediate impact will be felt at fuel stations, locally and abroad. The international oil price has surged by more than 40% in March to the highest level since 2022 after the US-Israeli attacks on Iran prompted Tehran to halt shipping through the Strait of Hormuz, constraining a fifth of global oil supply.
Additionally, the rand depreciated by 6,3% as investors rushed to “risk-off” mode, with emerging markets falling on the wayside in this environment. “While the gold price remains elevated, supporting the rand, the US dollar staged a notable comeback as a safe haven during crisis time,” says Kruger.
The oil price spike and notable depreciation resulted in the average rand price of oil, month-to-date, being almost 36% higher than in February.
“But the daily under-recoveries compared to our current pump prices signal the extent of the fuel price shock on 1 April,” says Kruger. The under-recoveries for the 95 ULP and 93 ULP petrol prices on 16 March were R7.45/l and R6.61/l, respectively, with the month-to-date average under-recoveries at R4.54/l and R4.10/l, respectively. On the diesel price, the impact is far worse, with the under-recovery for the 0.05% diesel price on 16 March at R11.30/l and the month-to-date average under-recovery at R7.40/l.
“These increases will be the highest ever to be implemented in a single month in South Africa and will likely derail the fragile economic recovery envisaged for South Africa in 2026, says Kruger.
“It is also likely that fuel prices will increase over several months, given South Africa’s fuel price determination that incorporates a slate account.” The slate account is a cumulative, self-adjusting mechanism used to manage the difference between the Basic Fuel Price (BFP), the daily, fluctuating international cost of imported fuel, and the regulated monthly pump price.
When fuel costs rise above the pump price, oil companies carry the extra cost for a short time. This is then paid back through a levy added to fuel prices, usually a month later; therefore, the slate levy impact is only likely to be seen from May.
Given the extent of the expected fuel price increases, companies are unlikely to absorb the rising costs. Consumer inflation is forecast to increase from 3,2% in March to around 4,5% in April – with knock-on effects across the economy.
“This could lift average inflation to 4,4% in 2026, above the SARB’s 3% target, increasing the risk of interest rate hikes,” says Kruger. “While the SARB may hold steady in March, a rate hike could come sooner than expected.”
South Africa has become increasingly dependent on imported fuel, with local production falling from 80% at its peak to just 35% of demand. Imports now supply nearly two-thirds of the country’s fuel needs. With global supply routes disrupted, shortages and price pressures are likely to persist, even if the conflict is resolved in the near term.
“The country’s vulnerability to fuel supply will, in all probability, now be exposed like never before,” says Kruger. “Although government is indicating that engagements are taking place with industry players to ensure uninterrupted fuel availability – without immediately tapping into South Africa’s strategic oil reserves. However, the reality suggests that industry players might be limited in what can be offered as solutions in a scenario where fuel problems are being felt in many countries right now.”
According to industry sources, the supply crunch is already felt on a wholesale level, with oil companies restricting fuel supplies to wholesale and commercial customers. These include customers in the agricultural, mining, and transport sectors, the heartbeat of the economy.
“This will highlight another vulnerability – the country’s dependence on road freight,” says Kruger.
While the retail sector has not been impacted yet, it is just a matter of time before the fuel supply crunch reaches the fuel stations which will broaden the negative impact on the economy beyond what is currently expected.
“The physical shortages of fuel experienced over an extended period of time could trigger a worst-case economic scenario that might remind us of the Covid-19 lockdown period, for example, arrangements such as working from home, cancelling unnecessary travelling could be returning, a negative confidence shock that could bring the economy to its knees,” says Kruger.