South Africans already cutting discretionary spending are facing another round of pressure from higher borrowing costs and a sharp fuel price increase in October, putting greater focus on recurring household expenses that can be reduced more structurally, says Abraham van der Merwe, CEO at Stage Zero.
Annual consumer inflation increased to 4,4% in August from 4,3% in July – with transport inflation reaching 8,8%, according to Stats SA. On 23 September, the South African Reserve Bank’s Monetary Policy Committee raised the policy rate by 25 basis points to 7,25%, taking the prime lending rate to 10,75%. The bank pointed to an intensified fuel-price shock and continued upside risks to inflation.
Motorists then faced a sharp increase at the pumps on 7 October when 93 petrol increased by R3.12 a litre and 95 petrol by R3.33 a litre. Wholesale diesel prices rose by between R2.84 and R3.24 a litre, depending on the grade.
“For households already trying to absorb higher costs, there is a limit to how much discretionary spending can be cut,” says Van der Merwe. “Once the obvious expenses have been reduced, it becomes worth looking at the larger recurring costs and asking whether some of them can be managed differently.”
The easy cuts are already happening
There are signs that many consumers have already worked through some of the most obvious areas of discretionary spending. Recent NielsenQ research shows that 45% of consumers were cutting spending on food delivery and takeaways. TransUnion’s second-quarter Consumer Pulse Study found that 28% had cancelled subscriptions or memberships.
Van der Merwe says this creates a difficult next step for households because many of the remaining costs are unavoidable.
“Cancelling a subscription can create an immediate saving, but households still need electricity and transport, and they still have debt repayments and other fixed commitments. When those costs rise, families have fewer places left to find meaningful savings,” he says.
The repo rate, petrol price, and regulated electricity tariffs are set outside the household. Grid electricity use leaves more room to act, because households can reduce how much power they need to buy.
Electricity is one recurring cost households can reshape
Electricity prices have risen much faster than general consumer prices for years. Codera Analytics calculates that Eskom’s aggregate standard tariffs have increased by an average of 14,5% a year since 2008, compared with average consumer inflation of about 5% over the same period. By 2026/27, average electricity prices are more than 10 times their 2008 level, while consumer prices are around 2.5 times higher.
Solar lets households generate electricity during daylight hours and use stored energy later, reducing how much electricity they need to buy from the grid. Moving to solar also does not necessarily require buying the system outright and companies like Stage Zero provide solar and battery systems through a monthly subscription with no upfront equipment or installation cost.
Van der Merwe says consumers considering subscription-based solar should consider their total spend by combining the monthly solar fee with remaining grid electricity purchases. The system also needs to be sized around the household’s actual electricity use so the customer does not pay for capacity they do not need.
“The goal should be to leave the household spending less on electricity overall,” Van der Merwe says. “That starts with getting the system specification right and being clear about what the customer will pay each month. A bigger system is not automatically a better deal if the household cannot make proper use of it.”
Van der Merwe says reducing the amount of electricity bought from the grid can also give households greater resilience during power interruptions, adding another benefit to the same infrastructure.
“With higher rates and fuel prices rising sharply, households are going to keep looking for areas where they have more control,” he says. “Electricity is one of the recurring expenses where changing how the household gets its energy can create that opportunity.”