The cost of living in Joburg and Pretoria: 2010 vs 2020

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The latest cost of living index released by The Economist Intelligence Unit shows that the prices of 138 goods and services in around 130 major cities in September 2020 increased by 0.3 points on average over the past year.

The Economist said the data points to several fluctuations in the price of goods in the wake of the Covid-19 pandemic, with prices – hence the cost of living – rising.

However, the increases were not widespread. Of the 10 categories covered by the report, tobacco and entertainment (including consumer electronics) saw the biggest price increases since last year, while clothing prices saw the biggest decline.

The price increases were due to currency volatility, supply chain issues, the impact of taxes and subsidies, and changing consumer preferences during the pandemic.

The movement of the exchange rate of the local currency against the dollar has caused many changes in global rankings, The Economist said, as cities are compared using an index in which New York is the base city.

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“In general, the currency weakness followed the pandemic as it spread across the world, from Asia to Latin America. In September 2020, when we surveyed, the currencies were weakest in the Americas and strongest in Western Europe, ”he said.

Supply chain issues affected pricing trends in the 2020 survey, with shortages of products such as toilet paper rolls and pasta fueling price increases in some categories.

In some cities, government actions have resulted in price changes. Some countries have imposed new price controls in the face of strong demand from panicked buyers. Others have raised taxes to make up for revenue deficits.

However, many countries have experienced a sharp decline in disposable income, despite government support. Consumers have responded by increasing precautionary savings and cutting spending.

“The lifestyle changes brought on by the pandemic have also influenced prices – for example, home buyers have a new outlook on the goods and services they see as essential,” he says.

South Africa

South Africa is represented in the index by Pretoria and Johannesburg, which now settle between 40 and 60 points, which means that the cost of living in these cities is between 40% and 60% cheaper than At New York.

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Price trends in South Africa would work against some of those seen around the world. For example, alcohol prices have trended upwards, with demand increasing as the lockdown takes hold.

In South Africa, however, a long-term alcohol ban has moved consumers away from legitimate sources of alcohol, reducing traceable demand. A similar global trend has been observed for tobacco products, which have had the same fate as alcohol, locally.

It should be noted how the cost of living in South Africa has fluctuated over the years. Today it is much cheaper to live in South Africa – compared to New York – than it was ten years ago when the index score for Johannesburg and Pretoria was 80 to 100 (0 to 20 % cheaper).

Compared to 2019, the cost of living in South Africa is cheaper.

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What awaits us

According to The Economist, what lies ahead for 2021 will depend on how the pandemic progresses.

“We expect many of the price trends to continue into 2021. The global economy is unlikely to return to pre-pandemic levels until 2022, spending will remain limited and prices under downward pressure.

The research unit said price-conscious consumers will prioritize spending on commodities, home entertainment and faster internet access. Bigger items, as well as clothing and entertainment outside the home, will continue to struggle, ”he said.

“The prices of laptops and smartphones will also be under the brunt of the price wars, as will many items in the food basket. Imported goods will remain sensitive to currency fluctuations. We expect online sales to continue to increase their share of total retail sales in 2021.

However, even online retailers will struggle to find new sources of revenue and will rely on price competition to increase volumes, ”he said.


Read: Food prices in Joburg vs Cape Town vs Durban

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