South African consumers faced multiple financial pressures in 2025 as changes to the fuel levy and an increase in electricity tariffs took effect, putting additional strain on households already grappling with a high cost of living.
Motorists feel the pinch over fuel levy hike
After three years without changes, the fuel levy increased on 4 June.
Finance Minister Enoch Godongwana announced, in his third budget speech on 21 May, a 16-cent-per-litre hike for petrol and 15 cents for diesel.
The increase came as a surprise, considering that in the second budget speech delivered on 12 March, Godongwana had explicitly avoided raising the levy to help South Africans cope with the high cost of living.
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The political pushback against the proposed fuel was swift.
The Economic Freedom Fighters (EFF) challenged the increase in court, seeking an urgent interdict to suspend the hike and later calling for a full review of the Finance Minister’s decision.
The interdict application, however, was unsuccessful, allowing the levy adjustments to proceed.
VAT increase scrapped
Earlier proposals to raise value-added tax (VAT) also stirred public concern.
Initially, Godongwana’s first budget speech proposed a 2% increase in VAT to 17%.
However, disagreements within the government of national unity (GNU) led to the postponement of the announcement in February.
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In March, the minister proposed a 0.5% increase over two years (2025/2026 and 2026/2027) to raise VAT to 16%, without adjusting personal income tax brackets for inflation.
However, a Western Cape High Court ruling reversed the proposed VAT increase, forcing the National Treasury to head back to the drawing board.
As a result, the VAT rate remained at 15%, sparing consumers from an additional financial burden.
Electricity tariff increases add to household strain
Households also faced rising electricity bills.
Eskom requested significant tariff increases, and Nersa initially approved hikes of 12.74% for 2025/2026 financial, followed by smaller increases of 5.36% and 6.19% for the next two years.
While the 12.74% increase already took effect on 1 April, errors in Nersa’s calculations were revealed in August, with Eskom citing a R107 billion shortfall.
A R54 billion out-of-court settlement led to adjusted increases of 8.76% for 2026/2027 and 8.83% for 2027/2028 fiscal years.
But the issue did not end there.
On 31 October, the Gauteng High Court in Pretoria ruled that Nersa’s approval process for municipal electricity tariff hikes was unconstitutional.
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The court found that the regulator failed to properly consult the public or verify municipal cost studies, thus violating both statutory and constitutional obligations.
While the 2025/26 tariffs remained in effect, Nersa was ordered to implement a more transparent process.
The court ruled that every year by 31 January, Nersa must notify municipal licensees of the bulk electricity tariffs they will pay to Eskom or other licensed generators for the coming financial year.
Municipalities must submit their tariff applications by 30 March or risk no increase being approved.
To involve the public, Nersa must publish all applications and their cost-of-supply studies in an accessible way.
Finally, Nersa must review the applications and announce its decisions by 5 May each year.
Cost of living challenge
The combined effect of the fuel levy, electricity tariff hikes, and the potential — but now scrapped — VAT increases highlights a harsh reality: South African consumers are under constant financial pressure.
With slow economic growth and rising living costs, every increase — whether at the petrol station, on your electricity bill, or in tax rates — directly impacts household budgets.
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