As prices continue to rise in South Africa, the cost of living rises with them. “Cost of living” simply means what it costs to run your everyday life, the money you need for essentials like housing, transport, food, electricity, school costs, and basic healthcare. When these essentials get more expensive, households must spend a bigger portion of their income just to maintain the same lifestyle. The result is straightforward: there is less money left over at the end of the month for savings, emergencies, and debt repayments.
For many consumers, this shift is not gradual, it feels sudden. A grocery shop that used to last a week now runs out sooner. A petrol refill costs noticeably more. Electricity units disappear faster. Municipal bills creep upward. Even small increases add up, because they hit you repeatedly across many categories. When your everyday costs rise at the same time, your budget begins to strain from multiple angles.
Why inflation pushes your monthly costs higher
Inflation is the general increase in prices over time. When inflation is high, the same amount of money buys fewer goods and services than it used to. That’s why people often say “money doesn’t go as far as it used to.” It is not just a feeling, it is the real impact of rising prices on purchasing power.
Inflation affects different parts of your budget in different ways. Some items, like food and transport, are purchased frequently, so you feel price changes quickly. Other costs, like school fees or insurance, might rise once a year, but the increase can be significant. And some expenses, such as rent or bond repayments, can jump when interest rates increase, which is a separate but related pressure.
Interest rate hikes and the cost-of-living squeeze
The cost of living has also been worsened by interest rate hikes introduced by the South African Reserve Bank (SARB) over the past few years. When inflation climbs too high, central banks often raise interest rates to slow it down. The idea is to make borrowing more expensive and encourage people to spend less, which can reduce demand and help cool price growth over time.
However, while higher interest rates may help reduce inflation in the long run, they can increase the pressure on households in the short term, especially households that have debt. Higher rates often mean higher monthly repayments on credit, such as home loans and certain types of personal finance. Even if your repayments don’t change immediately, interest rate increases can still raise the overall cost of borrowing and make it harder to catch up if you fall behind.
This approach has not been unique to South Africa. Around the world, central banks have taken similar steps to respond to inflation that surged after major global disruptions, including COVID-19 and Russia’s invasion of Ukraine. These events affected global supply chains, energy markets, food production, and transport costs. When the prices of key inputs rise globally, many countries feel the impact locally — including South Africa.
The “double blow”: rising prices and wages that don’t keep up
One of the hardest realities for consumers is that wages often increase more slowly than inflation. In other words, even if you get a salary increase, that increase may not be enough to match rising costs. When that happens, you experience a decline in purchasing power. Your income may be higher on paper, but it buys less in practice.
This is the “double blow” many households face:
the price of essentials rises, and
wage growth does not rise at the same pace.
Over time, this gap forces people to make tougher choices. You may cut back on “nice-to-haves,” but eventually the pressure reaches the essentials too. Families start buying fewer items, skipping certain foods, delaying medical visits, or reducing transport costs even when it makes life less convenient. When there is nothing left to cut, people often turn to credit to cover the gap.
How cost-of-living increases affect debt repayments
When everyday expenses rise, the portion of your income that goes toward essentials increases. This reduces the portion available to service debt. For a household with multiple credit commitments such as a home loan, car finance, personal loans, retail accounts, and credit cards the budget becomes increasingly tight.
This is how the debt spiral often begins:
First, you use a little more credit to get through the month.
Then, you start paying only the minimum instalments.
After that, you rely on credit for essentials like groceries or fuel.
Soon, interest and fees grow faster than your ability to repay.
Finally, you miss one repayment, then another, and default becomes more likely.
As the cost of living goes up, consumers are pressed to spend more of their wages on rent or bond payments, groceries, transport, and electricity. If debt repayments remain the same or increase because interest rates rise something has to give. Unfortunately, that “something” is often debt repayment.
When consumers begin defaulting, the consequences can become serious: penalty fees, legal action, negative credit records, repossessions, and long-term financial stress. That’s why it is important to respond early, before the situation becomes unmanageable.
Tips to deal with rising costs
Even when inflation is high and many prices feel out of your control, you still have power over how you plan, budget, and buy. The goal is not perfection, it’s progress. Small improvements in spending habits can protect your cash flow and reduce the chances that you fall behind on debt.
Here are practical steps you can start implementing immediately.
1) Budgeting: take control of your money flow
Tracking your income and expenses is one of the most effective ways to manage your money. Many people avoid budgeting because they think it will make them feel restricted. In reality, a budget gives you freedom, because you know exactly what you can afford and you can make decisions with confidence.
A useful budget is simple and realistic. Here’s a clear process you can follow:
Step 1: Calculate your reliable monthly income
Include your salary and any other income you can depend on (for example, consistent side income). Be careful not to count irregular income as if it is guaranteed.
Step 2: List your essential fixed expenses
These are costs that stay roughly the same each month: rent or bond repayments, car instalments, insurance, school fees, medical aid, and minimum debt repayments.
Step 3: Estimate your variable essential expenses
These are essentials that change month to month: groceries, transport, electricity, data, and household items. Use your last two to three months of spending to estimate a realistic average.
Step 4: Identify non-essentials and “leaks”
This includes takeaways, subscriptions you don’t use, extra bank charges, impulse buys, and small daily purchases that add up. Many budgets fail not because of one big expense, but because of many small ones.
Step 5: Set limits and monitor weekly
You don’t need to track every cent forever, but you do need to monitor often enough that you catch problems early. Checking weekly is better than waiting until the end of the month when it’s too late to adjust.
A budget works best when it reflects your real life. If you make it too strict, you’ll abandon it. If you make it too loose, it won’t protect you. Aim for a budget you can maintain. Use the debt calculator to kick start your budgeting exercise.
2) Shop around before buying
One of the simplest ways to reduce spending is to compare prices before you buy. Prices can vary significantly between stores, even for the same items. By planning around specials, you can stretch your money without lowering your quality of life.
A good method is to:
check weekly specials at nearby supermarkets,
build your shopping list based on specials and what you already have, and
plan meals around affordable ingredients.
If you use delivery apps, you can compare totals quickly. Grocery delivery services like Checkers Sixty60, Pick n Pay asap, and Woolworths Dash can help you add items to your cart and compare totals but still stay aware of delivery fees and impulse extras that can push up the final amount.
3) Eliminate food waste
Food waste is one of the most expensive habits in many households. Throwing away unused food is the same as throwing away money. The solution starts with one simple step: check what you already have before you buy more.
Try this approach:
do a quick pantry and fridge check,
plan meals around what needs to be used soon,
freeze items you won’t use immediately, and
shop with a list to avoid “guessing purchases.”
Fewer trips to the shop also reduces temptation spending — those extra items that “just jump into the trolley.”
4) Change where you shop
If your usual store has become too expensive, consider changing. Some stores focus on keeping prices lower, while others offer better loyalty rewards that reduce long-term spending. Even shifting some of your shopping, for example, buying basics at a lower-cost retailer and only buying selected items elsewhere can lower your overall grocery bill.
Also look at loyalty programmes that match your household spending patterns. A good loyalty programme is one you actually use consistently, not one that sounds good but sits unused.
5) Shop generic products where it makes sense
Generic or house-brand products are often significantly cheaper than name brands, and in many cases the quality is comparable. This doesn’t mean you must switch everything. A smart approach is to test generics in categories where brand differences are small like basic pantry staples, cleaning products, and household items.
Over time, swapping even a few regular items to generics can produce noticeable monthly savings without sacrificing what matters most to you.
How Debt Sage can help
Sometimes the issue isn’t just budgeting, it’s that your debt repayments have become too high relative to your income, especially after rising costs and interest rates. If you’re struggling with the cost of living and falling deeper into debt, you may need more structured support.
Debt Sage’s debt review solution is designed to help consumers who can no longer afford their monthly debt obligations. The goal is to reduce monthly instalments to a more manageable level, so you can regain control of your budget and avoid falling further behind.
If you’ve reached the point where you’re choosing between essentials and debt repayments, it’s a sign to act sooner rather than later. The earlier you address the problem, the more options you typically have and the easier it is to stabilise your finances.