President Ramaphosa Outlines Multi-Pronged Strategy to Tackle Living Costs

In a firm response to growing concerns over the escalating cost of living in South Africa, President Cyril Ramaphosa assured the National Assembly on Tuesday that his government is taking a comprehensive, multi-sectoral approach to alleviate the financial burden on households, particularly those in low-income and vulnerable communities.

The President was addressing questions during a parliamentary session, where MPs sought clarity on whether the government plans to introduce further interventions beyond economic growth and job creation, given that household expenses—especially the average food basket—have increased by nearly 40% above inflation rates in recent years.

Fighting the High Cost of Living: A Strategic Priority

President Ramaphosa reaffirmed that reducing the cost of living is one of the three strategic priorities of the current Government of National Unity (GNU) and forms a central pillar of the Medium-Term Development Plan. He cited macroeconomic stability, direct relief measures, structural reforms, and public service investments as the key elements of the government’s anti-poverty and cost-of-living agenda.

“South Africa’s macroeconomic policy framework has been a key lever for shielding the poor from the high cost of living,” said President Ramaphosa.

He highlighted that the government’s inflation-targeting monetary policy had a stabilising effect on prices, with food price inflation dropping from 12.7% in late 2022 to just 2.2% in March 2025. Similarly, headline inflation averaged 4.4% in 2024, moderating further to 2.7% in March 2025.

Key Measures to Shield Households

To cushion low-income households, the President underscored several ongoing and new measures:

1. VAT-Exempt Basic Food Items

Staples such as maize meal, brown bread, rice, samp, milk, and eggs remain zero-rated for VAT, reducing the cost of essential items and ensuring affordability for poorer families.

2. Redistributive Fiscal Policy and Social Wage

South Africa continues to spend nearly 60% of its annual revenue on the social wage, including allocations for:

• Social grants

• Education

• Public healthcare

Notably, recent budget announcements included increases in social grants above the inflation rate, enhancing the purchasing power of recipients.

3. Free Basic Services

A significant portion of the equitable share allocated to municipalities supports a free basic services package for over 11 million households. These services include:

• Free or subsidised water

• Free or subsidised electricity

• Waste management and sanitation services

Ramaphosa emphasized that municipalities must ensure these benefits reach all eligible households to have the desired poverty-reducing impact.

Addressing Food Insecurity Directly

In a response to food insecurity exacerbated by economic hardship, the Department of Social Development has established a network of more than 3,000 centre-based food programmes. These centres provide:

• Daily access to nutritious meals

• Psychosocial support

• Developmental and welfare services

The President stressed that these centres play a critical role in meeting immediate survival needs while supporting broader social development.

Tackling Structural Cost Drivers

Beyond emergency relief, the President also outlined steps to address structural factors contributing to high living costs:

1. Housing Reform

Recognizing the legacy of apartheid spatial planning, the government is reforming housing policies to provide affordable housing closer to economic hubs, reducing transportation costs and improving access to opportunities.

2. Improving Public Transport

Efforts are also underway to restore and enhance commuter rail services, making transportation more affordable and accessible for workers and students.

These reforms are designed to address long-standing inequalities and reduce the “poverty premium”—the phenomenon where the poor pay more for essential services due to distance or infrastructure constraints.

Long-Term Economic Transformation

While immediate interventions are crucial, President Ramaphosa reiterated that inclusive economic growth and sustainable job creation remain the cornerstones of the government’s anti-poverty strategy. He acknowledged that short-term relief must be matched with long-term development to break the cycle of poverty.

“Our response must be comprehensive and must continue to protect the poor while unlocking growth and opportunity,” the President noted.

President Cyril Ramaphosa’s assurance to Parliament reflects a clear understanding of the economic pressures facing South Africans, particularly the poor. By combining short-term relief, macroeconomic stability, and long-term structural reforms, the government is pursuing a holistic and people-centred approach to economic justice.

While challenges remain, the steps outlined signal a commitment to building a more equitable and resilient South Africa, where all citizens can enjoy a dignified standard of living.