South African consumers are grappling with severe financial pressures as the ongoing US-Iran conflict exacerbates fuel prices and inflation. A recent survey reveals alarming statistics about consumer strain, prompting experts to warn of a potential economic meltdown.
Image: US Central Command / AFP
South African consumers are facing a financial storm as the effects of the United States (US) and Iran conflict effects start to trickle through to our shores.
While US President Donald Trump announced an indefinite extension of the ceasefire between the two nations, the US blockade of the strategically crucial Strait of Hormuz is set to remain in place, which keeps concerns over oil supply firmly on the table.
This will continue to directly affect fuel prices in South Africa and around the globe as oil supply will become constrained.
What is alarming is that despite government's efforts to try and help cushion South Africans from hefty fuel price increases by staying the fuel price levy for April, data from the latest Debt Rescue consumer survey revealed that consumers are already buckling under the pressure.
The survey was conducted amidst the April 2026 fuel and electricity price hikes, which revealed the impact of the latest price surges and how it has added financial pressure to consumers in the country.
9 out of 10 respondents polled in the survey reported that they are under serious financial strain.
People are cutting back on essential goods and services to make ends meet, with 52% of those polled saying they are facing severe financial pressure and don’t know how they will cope, while 32% will now struggle to afford the basics.
According to Neil Roets, CEO of Debt Rescue, South Africans have valiantly attempted to weather the storm of escalating costs over the past five years. However, “their wells have all but run dry,” he said.
“Another sharp increase in the fuel price will push inflation up even more, and this is likely to result in a significant slowdown in economic growth in South Africa, in turn putting severe strain on hard-working consumers due to the resultant job losses, reduced disposable income, and higher debt-servicing costs,” Roets said.
“This means that households will likely cut down on non-essential spending, creating a vicious cycle of decreased demand, which will weaken the economy further and exacerbate already high unemployment. We are heading for a meltdown,” Roets added.
Statistics South Africa released Consumer Price Index (CPI) this past week that showed inflation edged up slightly from 3% to 3.1%.
The main contributors to the higher inflation in February were housing and utilities, which increased in their contribution by 0.1 percentage point, as well as entertainment, restaurants, and accommodation services, which increased by 0.2 percentage points over the February read.
Frank Blackmore, Lead Economist at KPMG South Africa, pointing to the Monetary Policy Review that was also released last week, said that there still remains a lot of uncertainty on the Middle East conflict.
Blackmore said, "There is still a lot of uncertainty around the war in Iran, both in terms of its duration and intensity. Therefore, most central banks have decided to hold interest rates at current levels. These levels are seen to be slightly restrictive, or moderately restrictive, affording authorities more room to look through the first-round effects of the energy price shocks that have come through."
He added that this means interest rates in South Africa are likely to remain higher for longer, with possibilities of an increase.
"Depending on the intensity and duration of the inflationary shock of the war. The Reserve Bank’s inflation model shows a number of alternative paths, depending on the assumptions used regarding the duration and intensity of these inflationary effects. The Reserve Bank still expects GDP growth to increase to around 2% by 2028, but the impact on household consumption expenditure may be skewed to the downside, given higher inflation for this year. This could reduce economic growth in 2026, although no specific growth levels were mentioned," Blackmore said.
"There could be some positive developments towards the end of 2025, including potential sovereign credit rating upgrades and the removal from the FATF grey list. The bottom line is that we can expect no further interest rate cuts this year. Any potential cuts may only materialise in the fourth quarter, and even then, only if the war ends relatively soon. Otherwise, rate relief may be carried over for a longer period," Blackmore added.
Another disturbing insight from the Debt Rescue survey is the grave impact the latest fuel and electricity price increases will have on the cost of food and household essentials.
“Steep electricity tariff hikes approved by the National Energy Regulator of South Africa (Nersa), including an 8.76% hike for Eskom customers and even higher municipal increases, effective April 2026 - are directly feeding into higher food manufacturing and retail costs,” Roets said.
The Debt Rescue Survey results concur, with 60% of respondents stating they expect a significant increase in grocery costs in the coming weeks and months, to the point that they may struggle to afford basics; while 75% believe fuel increases are significantly driving up the cost of goods and services.
“My advice to those who cannot break free from their financial constraints is to seek help from a registered debt counsellor who can assist them to manage their financial predicament. This has been a very successful solution for thousands of consumers who are plagued by over-indebtedness,” Roets said.
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