The volume of electronic transactions increased sharply, reaching 195.5 million in March, up 13.4% year-on-year, says PayInc.
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After South Africans spent R1.475 trillion in March, an indication of an improvement in economic activity, there are dark clouds ahead as higher fuel costs will spill over into everyday essentials.
This is according to the latest PayInc Economic Index, which showed that the nominal value – which includes inflationary effects – of electronic transactions rose from R1.326 trillion in February to R1.475 trillion in March.
The volume of transactions also increased sharply, reaching 195.5 million in March, up 13.4% year-on-year.
“It is evident that the cumulative impact of the tailwinds supporting the economy since 2025 have lifted economic activity,” said Elize Kruger, independent economist. “These include moderating inflation, real wage increases, interest rate cuts and improved confidence levels.”
Other indicators also pointed to improved activity. Vehicle sales increased by 17.3% year-on-year in March, while new car sales rose by 18.2%, according to Naamsa.
Both the S&P Global South Africa Purchasing Managers’ Index and the Absa Purchasing Managers’ Index have improved, with data pointing to stabilising conditions, although manufacturing – a key economic driver – activity remains in contraction.
However, Kruger cautions that while March’s strong economic performance is encouraging, it is the calm before the storm. The Iran war has disrupted the economic scenario envisaged for South Africa and the world.
Although a temporary fuel levy subsidy of R3 per litre has softened the impact in April, petrol prices increased by R3.06 per litre and diesel by R7.37 per litre at the start of the month, the largest single monthly increases on record.
Month-to-date data indicates further pressure ahead. The under-recovery for petrol stood at around R3.20 per litre, while diesel showed a significantly larger under-recovery of R9.61 per litre.
“At least two more months of increases are likely, unless notable progress is made to end the conflict on a meaningful, sustainable basis,” said Kruger. The daily under-recoveries when contrasted with current pump prices signal that another fuel price shock is in the making for the adjustment on 6 May, particularly for diesel users, said PayInc.
The impact is already filtering through to the broader economy. Airlines have introduced fuel surcharges, courier companies have adjusted pricing, and ride-hailing services have increased fares, while agricultural groups have warned of rising food costs.
Higher global oil prices, driven by ongoing conflict in the Middle East, are feeding directly into South Africa’s fuel price increases. With oil priced in dollars, movements in the rand are amplifying the impact, raising the local cost of fuel imports.
However, Brent crude oil prices are improving, and have traded around $95 per barrel, fluctuating as markets weigh supply disruptions and the possibility of renewed US–Iran negotiations, according to Trading Economics.
South Africa's economic situation in numbers.
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Trading Economics also notes that the rand has remained volatile in recent weeks, trading below R16.40 against the dollar as markets respond to developments in the Middle East, underscoring South Africa’s exposure as a net oil importer.
This dynamic is already influencing the inflation outlook.
The South African Reserve Bank held interest rates at 10.25% in March but warned that the conflict is clouding the inflation trajectory and could open the door to rate hikes if price pressures persist, Trading Economics noted.
“It will be impossible for companies to absorb the extent of these projected fuel price increases that will not only cause a spike in consumer inflation but also likely to trigger a widespread upward adjustment in prices across the economy,” said Kruger.
Despite the shift towards digital payments, cash remains widely used in South Africa.
The PayInc Cash Index declined by 1.9% in the fourth quarter of 2025 compared with the previous quarter, with supply and inventory indicators both falling. However, the demand indicator increased by 2.1% over the same period and remained 2.8% higher than a year earlier, signalling continued reliance on cash.
The South African Reserve Bank estimates that 62% of South Africans still rely on cash for daily transactions, PayInc said. “Cash remains an important payment method in South Africa, despite plans to reduce its dependency in favour of digital transactions,” it added.
“While the economy started the year on a reasonably optimistic footing, the Iran war is now impacting inflation and interest rate expectations and will likely derail South Africa’s fragile economic recovery,” says Kruger.
Kruger added that, “though it is still early days to quantify the impact, the longer the war prolongs, the worse the outcome will be for South Africa and the global economy at large”.
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