Despite a slight slowdown in inflation, the real purchasing power of South Africans continues to decline, raising concerns about economic stability. Workers in South Africa are in a worse position compared to the previous year, even though they received a real net income increase for the first time in nine consecutive months.
According to the latest PayInc Net Income Index, the average real net wage in July was R20,269, which is 2.2% less than the previous year. Real wages increased by 0.4% compared to June, aided by a slowdown in inflation.
This index tracks the average net wages of about 2.1 million workers in South Africa and shows that purchasing power remained under pressure throughout 2026. In nominal terms, before accounting for inflation, the average net wage rose to R21,642 in July, which is 0.2% higher than in June and 2.2% more than the previous year.
However, the growth in nominal net wages over the first seven months of the year was only 1.6%, significantly lower than the 3.7% growth in 2025. Independent economist Eliza Kruger noted that the overall picture indicates sustained moderate wage growth. She emphasized that South African households continue to cope with a difficult economic environment, making the recovery of purchasing power particularly important for consumer confidence and spending.
Inflation Provides Some Relief
July offered some respite: the overall inflation rate slowed from 5% in June to 4.3%, marking the first decrease in five months and being driven by lower fuel prices. PayInc reported that the significant drop in fuel prices in July also helped consumers.
This slowdown contributed to a monthly increase in real net wages of 0.4%, breaking a nine-month streak without a monthly improvement, according to PayInc. Nevertheless, this increase was not enough to offset the damage already done to household purchasing power. Real net wages decreased by 2.1% this year, and the July level remained 2.2% below last year's level.
Kruger stated that 'moderate inflation provided some relief for wage earners in July and contributed to the first monthly increase in real net wages in nine months.' She added that 'purchasing power remains weaker than a year ago, and this ongoing decline has implications for household spending and consumer confidence.' PayInc warned that this relief may be short-lived, as higher international oil prices create new risks for domestic fuel prices and inflation.
A sustainable recovery in purchasing power will depend on stronger wage growth, contained inflation, and, importantly, an improvement in the overall economic and employment environment.
Differences in Wages
Wage conditions also vary significantly depending on where South Africans work. Data from the South African Reserve Bank, cited by PayInc, showed that the growth in average private sector wages slowed to 4% in 2025 compared to 4.1% in 2024 and 5.4% in both 2022 and 2023.
There were also large discrepancies between industries: nominal wage growth per worker ranged from 4.6% in manufacturing to 8.8% in gold mining in the last quarter of last year. Public sector workers performed significantly better. Average compensation grew by 8.6% in 2025 after growing by 9.1% in 2024, ensuring a real increase of over 5% in both years.
Kruger noted that 'wage growth cannot be viewed separately from the state of the broader economy and labor market.' She added that companies facing profitability pressures tend to postpone investment decisions and have fewer opportunities for substantial wage increases. Despite the improvement in July, she warned that the pressure on households has not disappeared.
She reiterated that 'a sustainable recovery in purchasing power will depend on stronger wage growth, contained inflation, and, importantly, an improvement in the overall economic and employment environment.'
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