South African salary earners faced immense challenges in April, resulting in average salaries dropping to R20,244 – the lowest level in two years.
These issues include slowing profit growth, rising inflation, and economic uncertainty – r
This is according to the latest PayInc Net Salary Index, which monitors the average nominal net salaries of around 2.1 million employees in the country.
“The average nominal net salary declined to R21,228 in April 2026. This represents a 0.6% decrease from March, and a 0.5% decline compared to April 2025,” said PayInc Head of Stakeholder Engagement Shergeran Naidoo.
According to PayInc, this decline shows a significant change after two years of strong salary growth in 2024 and 2025, during which earnings generally kept up with inflation.
Economists have noted that the significant decline in the economic outlook due to the outbreak of the war in the Middle East is starting to impact the labour market.
Companies are experiencing increased uncertainty regarding profitability, costs, and planning, which is beginning to exert pressure on earnings growth and job prospects.
With inflation on the rise and nominal salary growth slowing, real salaries have experienced a further decline.
The PayInc Net Salary Index, adjusted for inflation, fell by 1.2% from the previous month and by 2.7% compared to April 2025.
This decline has brought real salaries down to R20,244, marking the lowest level recorded in two years.
The deteriorating outlook for inflation has been largely driven by sharp increases in fuel prices in April and May.
This trend has overturned earlier expectations for a more favourable inflation situation at the beginning of 2026.
In April, South Africa’s headline inflation rate rose to 4.0%, the highest level since August 2024. Forecasts indicate that inflation in May could rise further to approximately 4.6%.
Economists said that the combination of slowing salary growth and rising inflation is creating a difficult environment for salary earners.
Households are facing pressure from several areas simultaneously, including higher fuel prices, increasing living costs, and the potential for rising interest rates.
PayInc said that the South African Reserve Bank’s Monetary Policy Committee (MPC) is likely to adopt a cautious stance as inflation risks grow.
With inflation forecasts for 2026 and 2027 projected to exceed the SARB’s newly established target of 3%, the likelihood of an interest rate hike announcement later this week has increased.
A bleak outlook
In April 2026, economist Elize Kruger stated in an interview with Kaya Biz that she expects the average headline Consumer Price Index (CPI) to rise to approximately 4.2% for the year, with potential for even higher short-term spikes.
This raises the possibility of tighter monetary policy. “It will really depend on how long the war lasts,” she explained.
However, she also noted that the South African Reserve Bank will be focused on second-round effects, which include wage pressures and increasing operating costs.
“There’s a chance that we will see a reaction on interest rates as a result of this war,” Kruger stressed the scale of the storm facing the economy.
She said it is a significant economic shock, and estimated that fuel prices could rise cumulatively by “about R7.20 per litre” for petrol and “almost R14 per litre” for diesel over a three-month period.
“There’s no way anybody can absorb this increase and not give it through to the end user.” She warned that this outcome will place additional pressure on both households and businesses.
“This effectively is just going to extend our cost of living crisis in South Africa,” Kruger said, adding that if interest rates rise in response, it will just add to that cost.
While resolving the conflict could relieve some pressure, Kruger warned that the damage might persist.
Even in a more optimistic scenario, Kruger stated that it won’t be easy to fully reverse what has already occurred.
