High Food Prices in South Africa Despite Abundant Maize Harvest

The global community is experiencing an acute labor shortage amid declining birth rates. While the population of South Africa continues to grow, the country faces a serious problem in creating enough jobs for its youth.

Major world economies fear they will lack young talent to sustain economic growth. Although South Africa has a sufficient population, it fails to provide employment for it. This paradox is reflected in the Average Population Assessment forecasts from Statistics South Africa for 2026.

According to these estimates, the country's population grew from 42.9 million in 2002 to an estimated 63.5 million in 2026, showing a 1.2% increase between 2025 and 2026. Meanwhile, the fertility rate has dropped to approximately 2.12 children per woman, which is close to the replacement level.

Globally, the population has grown from 6.3 billion to 8.3 billion, representing a 32% increase over the same period.

Global Shift

Worldwide, declining birth rates are increasingly viewed as an economic rather than just a demographic issue. According to the Economic Observatory, this fundamental demographic shift is already having a tangible impact, raising questions about aging populations, shrinking workforces, and the sustainability of social security systems.

A study by the Centre for Global Development warns that slowing workforce growth could lead to reduced productivity, constrained economic expansion, and increased pressure on pension systems and public finances. Experts note that by the 2050s, most people will live in countries with a decreasing absolute number of working-age individuals.

The Economic Observatory emphasizes that this demographic transition is transforming economies, raising questions about the financing of social security systems. However, South Africa is not yet facing this problem.

Continued Growth

Statistics South Africa states that the country's relatively young population allows for population growth to be maintained, even with smaller family sizes. Improved female life expectancy also contributes to what the agency calls a sustainable long-term growth path.

The agency reports that although slightly more boys are born than girls in South Africa, women constitute the majority of the population. In 2026, about 51% of the country's population, or 32.3 million people, are women. Statistics South Africa also notes that in many countries, natural growth is declining due to fertility rates falling below replacement level.

Despite the fact that natural growth rates in South Africa are also slowing, the country continues to show overall population growth. The young population plays a key role in maintaining this growth, as even if women have fewer children, there remains a sufficient number of women of reproductive age, which, combined with increased life expectancy, ensures enough births for population replacement.

A Different Problem

However, South Africa's demographic advantage comes with a completely different challenge. Instead of worrying about a shortage of workers, the country needs to create enough opportunities for millions of young people entering the labor market.

Trading Economics calculated that the youth unemployment rate among those aged 15 to 34 reached 45.8% in the first quarter of 2026, and using an expanded definition, this figure exceeded 60% among the youngest applicants. These figures are confirmed by the quarterly Labor Force Survey from Statistics South Africa for the same period.

Of the 10.3 million people aged 15 to 24, more than a third were unemployed, uneducated, or untrained. The total working-age population of South Africa was 42.2 million, but only 16.8 million were employed, while 8.1 million were unemployed, and 17.3 million were not in the labor force at all.

For economists, this represents a classic demographic paradox: aging countries seek workers to maintain growth, whereas South Africa has a growing pool of potential workers but cannot integrate them into the economy. Demographers call this the demographic dividend—a period when a large number of working-age people can accelerate economic growth. Nevertheless, this dividend is not automatic; without faster economic growth, investment, and job creation, the young population can become a source of rising unemployment rather than a competitive advantage.

The constant rise in expenses for food, transport, housing, utilities, and borrowing is putting serious pressure on household budgets across South Africa, forcing many families to struggle with daily spending.

Stability, not relief

Recent news headlines point to a general trend caused by accelerating inflation and persistently high interest rates. The cost of living crisis in South Africa is defined not by a single economic indicator, but by the cumulative pressure of daily expenses that continue to deplete household financial reserves.

The pressure is felt in almost every aspect of personal finance: from the cost of a basic food basket and growing debt to reduced savings and the unattainability of homeownership. Studies and data show that many South Africans continue to face a rising cost of living.

Consumer inflation accelerated to 5% in June, largely driven by food, fuel, and other essential goods prices, intensifying concerns about a potentially prolonged period of price increases.

A few days after this, the South African Reserve Bank decided to keep interest rates unchanged, holding the lending rate at 10.5%, as policymakers attempted to balance domestic inflationary pressure with an uncertain global outlook.

Stability, not relief

For homeowners, consumers servicing car loans, and businesses reliant on borrowing, this decision brought stability rather than relief. Nevertheless, the South African Reserve Bank warned of the possibility of further interest rate hikes.

Lesetja Kganyago, Governor of the South African Reserve Bank, stated after the last meeting that 'our main contribution is stabilizing inflation in line with our 3% long-term target, and the Monetary Policy Committee will act as necessary to achieve this goal.'

Kganyago noted that depending on external events, inflation could remain above the target level, which would affect food and basic goods prices. This would require further rate hikes this year and an extension of the restrictive policy period. In a favorable scenario, conversely, inflation would return to target faster, implying a start to rate easing this year.

Kitchen-table economics

For households, affordability is not measured by a single interest rate announced at a press conference. It is determined at the kitchen table at the end of the month when wages are distributed among transport costs, electricity, rent or mortgage repayment, school needs, insurance premiums, debt payments, and groceries.

What remains after paying these bills determines whether funds are available for savings, emergencies, or even balanced nutrition. The latest Cost of Living Report by the Competition Commission asserts that only the overall inflation rate provides a partial picture of the pressure consumers face.

Although overall inflation has decreased compared to post-pandemic multi-year highs, households continue to spend a significant portion of their income on unavoidable expenses, especially housing, utilities, and food, leaving far less for discretionary spending than inflation figures might suggest.

The report also highlights that low-income households experience inflation differently from more affluent consumers, as a much larger proportion of their income goes towards necessities. Consequently, even a small increase in the price of food, electricity, or transport disproportionately affects disposable income and standard of living.

Biggest worry

Consumer surveys consistently show that the cost of living has become one of the biggest financial problems for South Africans, surpassing interest rates. At the same time, debt advisors, consumer organizations, and economists point to the same core issue: incomes are not keeping pace with the aggregate cost of essential living expenses.

As a result, many households no longer react to a single financial shock. Instead, they cope with the cumulative impact of higher food prices, increased borrowing costs, rising municipal fees, and transport expenses, often without sufficient buffer for unforeseen costs.

This picture becomes clearer when we move away from national inflation data and look at what households actually spend monthly. Recent household affordability studies suggest that despite improvements in some inflation indicators, millions of South Africans still feel that the cost of meeting their most basic needs is out of reach.

Electricity and water

The Competition Commission's report found that between 2020 and January 2026, electricity prices rose by approximately 85%, and water prices by approximately 68%, significantly exceeding the overall inflation growth, which increased by 30% over the same period.

Maintaining this growth reflects deeper structural issues in the utility sector, including outdated infrastructure, high debt obligations, operational inefficiency, and the need for constant capital investment, according to the body.

The Competition Commission also found that consultancy costs grew faster than the overall inflation rate and remained high in 2026, while the food basket presented a mixed picture.

Commissioner Doris Tshepe stated: 'Solving the cost of living problem requires closer examination of regulated price-setting mechanisms, increasing transparency and accountability in tariff determination, as well as targeted protection for vulnerable households.'

Tshepe added that 'without a focused attention on how prices for essential services are formed and passed through the economy, price pressure is likely to remain entrenched, limiting household welfare gains and slowing broader economic recovery.'

What ends up in the trolley

If inflation gives the big picture, the supermarket trolley shows how the cost of living crisis manifests in households across the country. Monthly, the Pietermaritzburg Group for Economic Justice and Dignity tracks the cost of the food basket for low-income families. The latest index shows that while food inflation has slowed compared to the sharp rise in recent years, affordability remains a serious problem.

The organization's June household affordability index showed that the average cost of its food basket reached R5,502.42, which was 1.1% higher than the same month a year earlier. However, the figures become much more alarming when viewed through the lens of nutrition, not just price.

Surviving, not thriving

PMBEJD calculates that a basic nutritious diet for a family of seven now costs R6,705.31 per month—more than R1,200 more than the cost of the basket they track. This gap illustrates the harsh reality faced by many households: families are increasingly buying enough food to survive, but not necessarily enough nutritious food to meet their dietary needs.

The report demonstrates that the problem is not simply the price of food. Rather, it is the growing number of essential expenses competing for the same household income. For many low-income families, transport costs are necessary for commuting to work. Electricity must be purchased for cooking, food preservation, and lighting. Rent cannot be postponed indefinitely. These expenses are covered before families even enter the supermarket, leaving the food budget to absorb the remaining money.

This dynamic helps explain why many South Africans say they are struggling, even though inflation remains significantly below levels seen two years ago. Households perceive inflation not as a single number, but as a series of inevitable monthly payments that gradually erode disposable income.

Minimum wage isn't enough

For workers earning the national minimum wage, the problem is even more acute. PMBEJD found that after paying for transport and electricity, many workers simply do not earn enough to buy even a basic nutritious food basket for their families.

The report also raises concerns about child grants, noting that they remain below the poverty threshold for the population and do not significantly cover the amount needed to provide a child with a basic nutritious diet. Meanwhile, purchasing a first home is becoming increasingly unaffordable for the average South African resident.

According to the latest BetterBond property bulletin, first-time homebuyers now earn 64% more than the average formal sector worker. This occurs against the backdrop of the average purchase price for a first-time buyer reaching a record R1.4 million in the second quarter of 2026, which is 9% higher than the previous year.

High-cost environment

BetterBond data shows that the average income of all homebuyers reached just under R69,000 per month for the 12 months leading up to June 2026. Stephan Potgieter, CEO of BetterHome Group Mortgage Origination and BetterBond, stated that greater purchasing power helped first-time buyers weather the high-cost environment.

Potgieter noted: 'Although slow economic growth meant wage growth only slightly outpaced inflation since 2021, the overall upward trend in incomes provided an important safety net for novice homeowners navigating high interest rates.'

However, the latest PayInc Net Wage Index showed that the average real net wage, adjusted for inflation, fell to R20,262, which is 2.8% lower than in May 2025, marking the lowest level in approximately two years.

The debt burden

Recent research indicates that many South Africans are struggling not just with rising prices, but with a growing mismatch between what they earn and what they need to spend monthly. DebtBusters' fifth annual stress tracker showed that the cost of living has overtaken interest rates as the primary source of financial stress for consumers, marking a significant shift in how households perceive financial difficulties.

While the main concern was inflation in 2022 and interest rates in 2023, consumers now state that the aggregate cost of daily life has become their biggest problem. According to the index, inflation concerns rose by 28% over the last year, and anxiety over electricity costs nearly doubled, increasing by 99%.

DebtBusters Executive Director, Benay Seiger, stated: 'Interest rates are no longer the main concern for consumers. The rising cost of living has taken over.'

He noted that while the dominant source of financial anxiety has changed over the past five years, 'what has remained constant is that short-term financial survival is displacing long-term planning for the vast majority of South Africans.'

A survey based on responses from 18,000 South Africans showed that 72% of respondents experience financial stress. More than half reported spending over 40% of their net income on debt servicing, which DebtBusters considers an unsustainable level, as it leaves households with little buffer to cover the rising cost of living or unexpected expenses.

Stress at home

The cumulative impact of this pressure has led to the highest level of household stress since the survey began, at 42%—more than a third higher than in 2025 and the highest recorded level since DebtBusters started operating.

South Africa's wheat industry is under close scrutiny as the Section 7 Committee examines trade, policy, and structural barriers affecting competitiveness and food security. NAMC experts explain how the industry plans to cope with policy restrictions and protect local grain producers from global shocks.

Reasons for the committee's creation

The Section 7 Committee was formed at the request of the wheat industry to the Minister of Agriculture and the National Agricultural Marketing Council (NAMC). This committee, operating under the Agricultural Marketing Act (Act No. 47 of 1996 with amendments), is tasked with studying the structural and political obstacles hindering the competitiveness of the domestic wheat industry.

The committee is responsible for analyzing issues related to trade policy, institutional and regulatory aspects, and the value chain, providing ministries with recommendations based on factual data. This investigation reflects growing concern that the industry's difficulties extend beyond seasonal production conditions and require a comprehensive assessment of trade policy, structure, and operational environment.

Strategic importance of wheat

As a strategically important staple food product, wheat plays a central role in South Africa's food supply system. The competitiveness and resilience of the domestic wheat value chain are priorities for the sector and ensuring household food security.

The challenges facing the wheat industry should be viewed from several perspectives: global market dynamics, industry competitiveness and growth, and domestic food security. Recent estimates by the Crop Estimates Committee (CEC) show that in the 2025 production season, South Africa produced 1.91 million tonnes of commercial wheat from an area of 517,300 hectares.

Trends in wheat production

Wheat remains the largest winter cereal crop in the country, underscoring its strategic significance for national food security and the broader grain economy. Analysis shows that while wheat consumption has shown relatively stable growth, production has fluctuated at a relatively constant level. The widening gap between production and domestic use indicates that demand consistently exceeds domestic supply, forcing imports to cover the deficit.

Although domestic wheat production has increased significantly over the past nine decades, this growth has been characterized by substantial year-on-year variability and has resulted in a negative trade balance. Since the early 2000s, wheat imports have noticeably increased, indicating a growing reliance of domestic supply on international markets to meet national needs.

Increasing import dependency

Consequently, South Africa's dependence on imports has strengthened over time. Where imports once constituted a relatively small share of the total available wheat, they now account for a significant portion of domestic supply over the last two decades. This growing dependency exposes the industry to external shocks, such as volatility in international prices, exchange rate changes, global supply disruptions, climate variability, and the weakening of the multilateral trading system.

Recent calculations confirm the structural nature of South Africa's reliance on imported wheat, highlighting the importance of the Section 7 Committee's investigation. Long-term trends in production, consumption, and trade confirm that the problems facing South Africa's wheat industry are structural and require a comprehensive assessment of the political, institutional, and market environment.

Committee's methodology

Since its establishment in May 2026, the committee has approved its Terms of Reference, clarified the analytical scope, expanded stakeholder participation, created thematic working groups, and begun technical assessments. In line with the social contract approach outlined in the Agricultural and Agro-processing Plan (AAMP), the Committee adopted the working group approach as a suitable methodology for conducting investigations.

The working groups comprise various participants in the value chain. A working group is defined as a parallel track of activities, tasks, and outcomes focused on a specific theme and objective. This approach allows large and complex topics to be broken down into manageable segments, enabling different groups to contribute simultaneously to the overall goal of the investigation.

Different working groups focus on the following functional themes: tariff setting and trade policy regarding wheat and wheat products; value chain constraints, storage, infrastructure, and logistics; transformation and inclusivity along the value chain; food security, biosecurity, innovation, and new breeding methods. The next phase of the committee's work will involve presenting materials to stakeholders, technical analysis, and evidence gathering, which will lead to recommendations for strengthening the competitiveness, sustainability, and long-term viability of South Africa's wheat industry.