Real take-home pay falls to lowest in two years: Here's what the average South African now earns
Average take-home pay rose to R21,510 in May, but inflation pushed real earnings down to R20,262.
Image: ChatGPT
South African salary earners are losing purchasing power despite modest salary increases, with real take-home pay falling to its lowest level in about two years as inflation, higher fuel costs and economic uncertainty squeeze household budgets.
According to the latest PayInc Net Salary Index, the average nominal net salary rose to R21,510 in May, up 0.2% from April and 0.9% higher than a year ago. After adjusting for inflation, however, the average real net salary fell to R20,262, down 2.8% from May 2025 and the lowest level in approximately two years.
For the first five months of 2026, nominal net salaries increased by just 1.7%, while real salaries declined by 1.7%, signalling a challenging year for consumers after two years of relatively strong earnings growth.
“While nominal salaries have edged higher, the reality is that salary earners are losing purchasing power,” said independent economist Elize Kruger. “This is placing increasing strain on household budgets and is likely to weigh on consumer spending and broader economic growth during the remainder of the year.”
Spending power
The pressure is already becoming evident in South Africa’s economic data.
Real household final consumption expenditure increased by just 0.1% quarter-on-quarter in the first quarter of 2026, down sharply from growth of 1.2% in the final quarter of 2025.
Spending growth was concentrated in essential categories such as transport, housing, electricity and utilities, while expenditure on restaurants and hotels, food and non-alcoholic beverages and other discretionary categories weakened.
The deterioration comes as inflation accelerated from a recent low of 3% in February to 4.5% in May, driven in part by rising fuel prices and the economic fallout from conflict in the Middle East.
Growing uncertainty has also weighed on confidence. The FNB/BER Consumer Confidence Index fell from minus 7 in the first quarter of 2026 to minus 19 in the second quarter, while the RMB/BER Business Confidence Index dropped eight points to 39 over the same period, reversing gains made during the previous two quarters.
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Image: ChatGPT
Difficult environment
“The combination of higher living costs, weaker confidence and ongoing uncertainty is creating a difficult environment for both consumers and businesses,” Kruger said.
“Companies are likely to remain cautious in their investment and hiring decisions until there is greater clarity on the economic outlook.”
The continued decline in real earnings is expected to limit consumer spending and reduce the potential for stronger economic growth.
Real GDP growth is currently forecast at 1.3% for 2026, marginally higher than last year but still insufficient to drive meaningful job creation or significant wage growth.
Oil down
There may, however, be some relief ahead. Following a tentative Middle East peace agreement, international oil prices have retreated, with Brent crude falling to around $77 a barrel.
Current fuel price over-recoveries suggest petrol and diesel prices could decrease by approximately R2.50 and R3.75 a litre respectively from July, potentially easing pressure on households and businesses.
Reflecting the improved fuel price outlook, Carpe Diem Research has revised its average inflation forecasts lower to 4.1% for 2026 and 3.8% for 2027, from previous forecasts of 4.4% and 4.1%, respectively.
While lower fuel prices could provide some relief, Kruger warned that uncertainty and volatility are likely to persist for the remainder of the year.
“In this environment, businesses will continue to adopt a cautious approach, which could negatively affect employment prospects and earnings growth for the remainder of 2026,” Kruger concluded.
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