South African families brace for rising grocery bills amid proposed VAT hike.
Expensive food following the VAT hike: South African households are facing escalating grocery costs as the price of essential food items continues to rise. Compounding this financial strain is the government’s proposal to increase the Value-Added Tax (VAT) by 0.5% on May 1, 2025, with an additional 0.5% hike planned for 2026, potentially bringing the VAT rate to 16% by 2026/27.
Rising Food Prices
The Pietermaritzburg Economic Justice and Dignity Group (PMBEJD) reports that the cost of a basic household food basket has seen a significant uptick. In March 2025, the basket cost R5,329.36, marking an increase from previous months. Staple foods such as maize meal, rice, and cooking oil have experienced notable price hikes, further straining household budgets.
Impact of the Proposed VAT Increase
The proposed VAT increase is expected to affect nearly all goods and services, excluding a limited number of zero-rated food items. According to PMBEJD calculations, a 0.5% VAT-rate hike will add R10.80 onto VAT, bringing the total 15.5% VAT on a basic basket of household groceries to R334.81, with the total basket increasing to R5,324.02.
Government’s Response
In an attempt to mitigate the impact on vulnerable households, Finance Minister Enoch Godongwana announced the expansion of the zero-rated food items list. As of May 1, 2025, additional items such as edible offal from sheep, poultry, goats, swine, and bovine animals; dairy liquid blends; and tinned or canned vegetables will be exempt from VAT.
Looking Ahead
As the cost of living continues to rise, South African families are urged to budget wisely and take advantage of VAT-free food options to alleviate financial pressure. The proposed VAT increase, coupled with escalating food prices, underscores the need for comprehensive strategies to support low-income households and ensure food security across the nation.
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