The usual calculations of how much consumers will have to pay on their mortgages, car instalments and credit cards, and how much more it will cost to fill their cars with fuel, do not come close to describing the impact of the latest interest rate increase and the coming rise in fuel prices.

Lee Naik, chief executive and regional president of TransUnion Africa, calculates that the recent 25-basis-point increase in interest rates is expected to raise monthly repayments on a R1 million home loan by about R160 to R170, while repayments on a R2 million home loan could increase by around R320 to R340.

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“A consumer financing a R400 000 vehicle could see repayments increase by approximately R65 per month.

“Although relatively modest in isolation, these additional costs arrive at a time when households are already contending with high living expenses and tighter budgets,” he says.

However, this tells only half the interest rate story, as this is the second rate hike this year.

The South African Reserve Bank also hiked rates by 0.25% in May. Since then, a household with a R2 million mortgage and another R1 million in vehicle and other debt will be paying nearly R1 000 more a month.

Over the past year, fuel prices have also increased sharply. In November 2025, petrol and diesel were hovering around R20 a litre – set to increase to nearly R30 per litre at the beginning of October.

The Central Energy Fund (CEF) daily calculation of the basic fuel price shows that the price of 95 octane petrol is set to rise by R3.12 a litre next week and that of higher quality diesel by R3.13 per litre.

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The usual calculation of how much a motorist will pay to fill a 65-litre tank – another R200 – might not seem too bad … but much worse is another calculation, using November 2025 as the starting point.

Motorists will be paying about R650 more for the same tank of fuel than they did less than a year ago.

It’s difficult to estimate how many litres a household uses, as fuel consumption varies widely from car to car and depends on driving style and, obviously, how many kilometres a person drives each month.

A reasonable starting point is that the average family uses three tanks of petrol a month. This means fuel costs will have increased by nearly R2 000 a month compared with November 2025.

There it is: the cost of servicing R3 million worth of debt and filling three tanks of fuel has increased by nearly R3 000 a month compared with 10 months ago.

The local pizzeria, shoe store and cinema will feel the pain because paying interest and buying fuel is not optional. Economists classify demand for fuel as largely inelastic when prices rise, and even when a person’s income declines.

Paying R3 000 more for fuel and debt simply means less money is available for other things. Economists refer to this as the substitution effect.

Bigger picture

Higher interest rates and fuel prices will have a huge impact on the economy.

South Africa uses between 30 billion and 35 billion litres of petrol and diesel a year, according to the Fuels Industry Association of South Africa.

The R10 difference in fuel prices compared with November 2025 will suck between R300 billion and R350 billion out of the economy over the next 12 months.

Households will eventually pay the price, either directly at the fuel pump or indirectly through higher inflation as businesses raise prices to recoup higher transport costs.

The two interest rate increases that added 0.5% to ruling interest rates since the start of 2026 will suck another R32.5 billion out of the economy, based on figures of total debt in the Reserve Bank’s latest Quarterly Bulletin.

In total, the interest rate increases and higher spending on petrol – leakage from the economy because SA is an oil importer – will cost the economy up to R300 billion over the next 12 months. This comes to R25 billion per month.

Thing will hopefully change for the better soon, but we are at the mercy of international markets.

The continued global uncertainties remain the biggest determinant of oil prices and exchange rates.

Johann Els, chief economist at PSG Financial Services, says in his take on the Reserve Bank’s interest rate announcement that it is clear the bank is concerned about the “sustained and large global supply shock” and how this will feed through into inflation expectations going forward.

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“Looking through the statement and listening to the discussion at question time, it is clear that there were enough arguments to keep rates unchanged,” says Els.

“It seems that the bigger issue was the concern that inflation expectations will rise because of the continued [global] shock.

“The governor pointed out that inflation expectations for the third quarter had come down – before it became known that there would be a significant petrol price increase in October.

“The governor said the global situation is having a much bigger impact on SA than previously expected. The risks to growth are to the downside, and the GDP growth forecast for this year was revised slightly lower.

“On inflation, risks were seen to the upside. The inflation forecast was lifted from 4% to 4.4% for this year and from 3.8% to 4% next year.”

Under pressure

TransUnion says in a short report that the interest rate increase came at a time when many households remain under significant affordability pressure.

“The 25-basis-point increase adds to a range of affordability pressures that have steadily eroded purchasing power throughout 2026. While inflation has moderated, many households have yet to experience meaningful relief in their monthly finances,” says Naik.

According to research conducted by TransUnion in the second quarter of 2026, consumers continue to adapt to financial pressure by changing their behaviour.

Nearly 53% of consumers have reduced discretionary spending, 44% shop at lower-cost retailers and 39% expect difficulty paying future bills and loans.

“The rate increase adds pressure to households already facing elevated fuel costs, transport expenses and ongoing affordability challenges,” says Naik, noting that consumers will most likely continue to reduce discretionary spending.

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There is a clear risk to economic growth from mounting pressure on consumers. Consumer spending has helped keep the economy going over the past few quarters.

The “resilience” of consumer spending is weakening amid uncertainty about global growth.