South Africans say they feel optimistic about their finances, but their behaviour tells a different story. As electricity, education and healthcare costs keep climbing, households are quietly restructuring how they spend, save and borrow just to stay afloat.

South African consumers are not reacting to the cost-of-living squeeze in the way you might expect.

Households are shifting into what can best be described as defensive consumption. They are reworking their financial lives around a simple reality: the fastest-rising costs are the ones they cannot avoid.

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And that is changing everything.

Under pressure

The Competition Commission's latest Cost of Living report makes the point that South Africa's affordability crisis is increasingly driven by administered and essential costs, rather than discretionary spending.

Electricity prices have surged by roughly 85% since 2020, with water up by about 68%, both far outpacing headline inflation of around 30%. Public school fees and healthcare costs are also outpacing inflation, while rentals have been relatively contained.

Each edition of the Cost of Living report includes a "deep dive" into one key cost driver. In this edition, the focus is on electricity tariffs. Electricity is a direct household expense and a major cost for businesses. When tariffs rise, they put pressure on household budgets and can push up prices across the economy, including food and transport.

The report found that pricing approaches that add costs on top of costs, including at the municipal level, can...