Rising Cost of Living and the Use of Credit for Essentials in South Africa

Introduction: The New Reality for South African Households

The cost of living in South Africa has been steadily rising, putting immense pressure on households across the country. For many, the monthly budget is stretched to its limit, and more South Africans are turning to credit just to cover basic necessities like food, fuel, and electricity. This growing reliance on debt for essentials is not just a personal issue—it’s a national trend with serious long-term consequences. At Trustory, we see the impact of this every day, and we’re committed to helping South Africans break free from the debt trap and build a path to financial independence.

Why Are South Africans Using Credit for Essentials?

The Numbers Behind the Struggle

Recent data from Statistics South Africa shows that annual consumer price inflation was 2.8% in May 2025, with food and non-alcoholic beverages rising by 4.8% and housing and utilities by 4.5%[1]. While these percentages may seem modest, the reality on the ground is much harsher. The average South African spends about R890 per month on food and non-alcoholic drinks alone[3], and utility costs have surged, with electricity prices climbing by over 10% in 2025[4][7]. For a family of four, monthly living costs (excluding rent) can exceed R38,000[6].

Stagnant Wages and Unemployment

Wages have not kept pace with these rising costs. Many workers have seen only minimal increases, often below the rate of inflation, while unemployment remains stubbornly high[9]. This means that even as prices go up, household incomes are not growing fast enough to keep up, forcing families to make tough choices.

The Temptation—and Danger—of Easy Credit

With essentials becoming unaffordable, many South Africans are turning to credit cards, personal loans, and retail accounts to fill the gap. What starts as a short-term solution quickly becomes a long-term problem. According to recent reports, default rates on personal loans and retail credit accounts have reached record highs, reflecting the severe financial strain on consumers[8]. When you use credit to pay for groceries or electricity, you’re not just borrowing money—you’re borrowing from your future.

The Impact of Using Credit for Essentials

The Debt Spiral Explained

When households use credit to pay for basics, they often fall into a debt spiral. Here’s how it happens:

• You use a credit card or take out a loan to pay for food, fuel, or electricity.

• Next month, you have to pay back what you borrowed—plus interest.

• Because your income hasn’t increased, you need to borrow again to cover the shortfall.

• Over time, your debt grows, and more of your income goes toward repayments and interest, leaving even less for essentials.

This cycle is unsustainable. Eventually, many people find themselves unable to keep up with repayments, leading to defaults, damaged credit scores, and even legal action.

Real-Life Example

Consider a Johannesburg family with a combined income of R20,000 per month. Their rent is R7,500, utilities are R2,000, and groceries cost R4,000. After transport, school fees, and other essentials, there’s little left. When the car breaks down or a child needs new shoes, the only option is to swipe a credit card or take a payday loan. Within a year, the family is juggling multiple debts, with monthly repayments eating up any disposable income.

The Emotional Toll

The financial stress of living paycheck to paycheck—and knowing you’re falling deeper into debt—can be overwhelming. It affects mental health, relationships, and even job performance. Many South Africans feel trapped, with no clear way out.

The Broader Economic Consequences

Rising Defaults and Economic Instability

As more households default on their debts, the effects ripple through the economy. Banks and retailers tighten lending criteria, making it harder for even responsible borrowers to access credit. Consumer spending slows, which can hurt businesses and lead to job losses—a vicious cycle.

Inequality and Social Impact

The burden of rising living costs and debt falls hardest on low- and middle-income families. Wealthier households may have savings or assets to fall back on, but for millions of South Africans, there’s no safety net. This deepens inequality and undermines social cohesion.

How Trustory Can Help You Break the Cycle

Lowering Your Monthly Instalments—Legally

At Trustory, we specialise in helping South Africans reduce their monthly debt repayments in line with the National Credit Act. Through our debt review process, we negotiate with your creditors to lower your instalments, giving you breathing room in your budget.

Building a Path to Financial Independence

But we don’t stop there. Unlike traditional debt review companies, Trustory helps you invest a portion of your monthly savings. This means that while you’re paying off your debt, you’re also building a financial cushion for the future. By the time you complete the debt review process, you’re not just debt-free—you’re on your way to financial independence.

Practical Example

Let’s say you’re currently paying R8,000 per month on debt repayments. After joining Trustory, we negotiate your instalments down to R5,000. Of the R3,000 you save, we help you invest R1,000 each month. Over three years, that’s R36,000 (plus growth) set aside for your future—money that can help you avoid falling back into debt.

What You Can Do Today

Take Control of Your Finances

• Track your spending: Know exactly where your money is going each month.

• Avoid using credit for essentials: If you’re already in this cycle, seek help before it gets worse.

• Get professional advice: Contact Trustory for a free, confidential assessment of your financial situation.

Don’t Wait Until It’s Too Late

The sooner you act, the easier it is to break the cycle of debt. At Trustory, we’re here to support you every step of the way—from lowering your repayments to helping you invest in your future.

Conclusion: There Is a Way Out

The rising cost of living in South Africa is a reality we can’t ignore. But you don’t have to face it alone. If you’re using credit to pay for essentials, know that help is available. At Trustory, we’re committed to helping you regain control, reduce your debt, and build a brighter financial future. Contact us today to start your journey toward financial independence.