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SIMON BROWN: I’m chatting now to independent economist Elize Kruger around the PayInc Net Salary Index data results for May 2026.
Elize, appreciate the early morning time. What we see is a slight increase, up to about R21 510 for May. It’s up 0.2% from April; It’s up 0.9% year on year. The problem is, as soon as we bring inflation into the picture, South African consumers are going backwards. We are poorer this year than we were a year ago.
ELIZE KRUGER: Good morning, Simon. Yes, indeed. Now, in real time terms we’ve seen a drop of 2.8% in the month of May. And also for the first five months of the year it’s already a drop of 1.7%. So it’s definitely eating into the purchasing power of salary earners.
And that is on top of other challenges like higher inflation generally and also the fact that we had an interest-rate increase. So there are lots of challenges still out there for the salary earner.
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SIMON BROWN: And to throw into the mix is the fuel price increase. It is tough, but maybe there’s a bit of a glimmer – and let’s get to that part, because as the fuel price is coming down that helps. The point is we are just not getting the increase.
There are two parts to the consumer sort of wallet, and we might get some relief from the fuel, but we’re not getting that relief in terms of income.
ELIZE KRUGER: Yes, indeed. In the short term I think we can get some good news at the pumps. Looking at the 1st of July adjustment, hopefully petrol will be down by between R2 and R2.50 and R3, and diesel almost R4 per litre.
And if I look at this morning’s oil price, now around $72/barrel, I think we are in for definitely another cut in fuel prices in August. So some reversal, some U-turn from the prices that we have seen in on the fuel side.
But unfortunately inflation has already moved in terms of levels.
So even though we might see these declines in July/August, inflation could come down towards 4% in that quarter.
There is unfortunately a low base of calculation that will push headline inflation back towards about 4.7% in the fourth quarter. So average wise, it’s going to be unlikely that salary earners are going to have increases above inflation in 2026.
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SIMON BROWN: And we of course already have the first rate hike. I imagine as a consumer there are certain things that we sort of can’t avoid – utility, transport. These are areas where we need to be spending. But I’m imagining it’s sort of our discretionaries.
I’m thinking restaurants, I’m thinking food and maybe beverages which are going to be particularly hard hit because those are the discretionary side of the wallet spend.
ELIZE KRUGER: Yes, indeed. We’ve already seen signs of that in the first quarter’s GDP data. The household spending composition showed that spending was mostly on essentials, and the discretionary spending came down quite a bit.
That was even before we had the full impact of the Middle East unfold in the economy. So I think we’re going to see more of that sort of luxury spending still under pressure in the second half of the year, and more of a focus on the essential spending.
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SIMON BROWN: You make a great point there. The war in Iran has certainly exacerbated circumstances, particularly around fuel. But my sense is that it was tough coming in. You mentioned up top that this has been a tough first five months for 2026.
The war has made it worse. This isn’t the only problem. It was tough out there before that even started.
ELIZE KRUGER: Yes, indeed. In a way, I would say surprisingly and disappointingly so, because we did start the year out with quite an optimistic economic view. Now the economic view has been sliced as a result of what happened in the Middle East and the impact on the South African economy.
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But even though that has been the case, quarter one, for instance, has already been a disappointing outcome both on salaries and on household spending. So I think we’ve had two good years, and it almost seems this year is a bit of a stabilisation year in terms of salaries.
SIMON BROWN: I take your point. We have had a couple of good years and maybe we are stabilising. We would like to be richer, but that’s not always a straight line.
We’ll leave it there. Independent analyst Elize Kruger has been weighing in on the PayInc Net Salary Index for May 2026. Appreciate the early morning.
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