Coffee Table Economics (CTE) with Anchor, by Casey Sprake, is distributed periodically. CTE is a compilation of Casey’s research, analysis, and perspectives on key South African (SA) and global economic data such as inflation, spending trends, and international market dynamics, including socio-political events and the multiple factors shaping the world economy.
This edition marks a significant milestone — the 50th issue of Coffee Table Economics with Anchor. We are proud to have reached this point and thank our readers for your continued support, engagement, and trust. We have aimed to deliver timely insights, thoughtful analysis, and meaningful commentary to help you navigate the economic landscape with clarity and confidence. As we celebrate this milestone, we remain committed to providing the same high standard of content you have come to expect from Anchor— with a view toward the following 50 issues and beyond.
Executive summary
In this week’s edition, we highlight the following:
- Beyond earnings: Understanding real purchasing power across Europe. When discussing economic prosperity, it is common to focus on income—how much people earn in euros, US dollars, or whichever respective local currency. However, looking at income alone tells only part of the story. To understand real economic well-being, it is essential to account for cost-of-living differences and examine purchasing power. This approach reveals not just what households earn, but how far those earnings stretch in meeting daily needs and supporting a desired standard of living.
- SA’s June food inflation: Signs of relief, but risks still simmer. Encouragingly, strong domestic harvest forecasts and stabilising supply chains suggest food price inflation could ease in the coming months. Nonetheless, risks remain in the form of recurring animal disease outbreaks, global commodity volatility, and energy costs, which could quickly reintroduce upward price pressures.
- Small sector gains fail to shift SA’s high unemployment burden. SA’s official unemployment rate rose to 33.2% in 2Q25, with the labour absorption rate remaining low at 40.2%, reflecting a fragile labour market amid weak GDP growth and ongoing domestic and global challenges. Losses in the agriculture and informal sectors offset employment gains in the formal sectors. Youth and low-education groups remain the most vulnerable, with headline figures continuing to understate the full scale of underemployment and the informal sector.
Beyond earnings: Understanding real purchasing power across Europe
When discussing economic prosperity, it is common to focus on income—how much people earn in euros, US dollars, or whichever respective local currency. However, looking at income alone tells only part of the story. Two individuals earning the same amount in different countries can have vastly different standards of living, depending on how much their money actually buys. Comparing incomes without considering local prices is like drawing only half a map -you know where people are financially, but not where they can realistically go. To understand real economic well-being, it is essential to account for cost-of-living differences and examine purchasing power. This approach reveals not just what households earn, but how far those earnings stretch in meeting daily needs and supporting a desired standard of living.
The purchasing power standard (PPS) is a statistical tool designed by the EU to make fair cross-country comparisons. It is an artificial currency in which one PPS buys the same quantity of goods and services everywhere, regardless of exchange rates or local price levels. In other words, PPS strips away the distortions of currency strength and price inflation to show how much actual economic value a given income represents in each country. This adjustment can significantly reorder the rankings. Switzerland, for example, tops Europe’s nominal income list at EUR178,553. But its PPS-adjusted income falls to EUR100,777, reflecting the country’s exceptionally high prices for housing, food, and services. While Switzerland still leads in real terms, much of its nominal advantage evaporates once living costs are factored in.
At the other end, Türkiye records the lowest nominal income at EUR22,880. Yet when adjusted for its relatively low cost of living, PPS income jumps to EUR72,731- over three times higher. This catapults Türkiye close to Ireland’s real income level, despite Ireland’s nominal income of EUR95,776 being more than four times greater. The parity between Ireland and Türkiye in PPS terms reveals two very different economic stories. Ireland’s nominal income is inflated by the accounting presence of multinational tech and pharmaceutical giants. Their profits swell national income data, but the gains are unevenly distributed and quickly eroded by some of Europe’s highest housing, childcare, and living costs. Türkiye’s low nominal wages reflect years of currency depreciation and persistent inflation. However, its domestic cost structure (particularly for groceries, local transport, and housing) remains among the lowest in Europe. As a result, day-to-day living can be more affordable than raw euro figures suggest, even if longer-term wealth-building is hindered by macroeconomic instability.
The broader economic implications are not just significant; they are crucial. For policymakers, PPS data are a stark reminder that raising nominal wages without addressing cost-of-living pressures may not meaningfully improve living standards. In some cases, reducing the cost of essentials can have a bigger impact on household welfare than increasing pay. For businesses and investors, it challenges assumptions about market potential. High nominal incomes do not always translate into higher discretionary spending if fixed costs (like housing and utilities) consume most of a household budget. For global economic comparisons, it highlights how currency strength or weakness can distort perceptions of prosperity, masking real living standards.
The bottom line
Ultimately, prosperity is not simply about how much money people earn—it is about how far that money goes in meeting daily needs and enabling savings, investment, and discretionary spending. Ignoring this reality is like navigating with only half a map: you may know the starting point, but you miss the terrain that determines the journey.
SA’s June food inflation: Signs of relief, but risks still simmer
SA headline inflation edged slightly higher in June, coming in at 3.0% YoY from 2.8% in May. This keeps inflation anchored at the lower bound of the South African Reserve Bank’s (SARB) 3%–6% target range- encouraging from a price stability perspective, but still a reminder that cost pressures remain in certain areas. On a MoM basis, inflation ticked up to 0.3% from 0.2% in May, primarily driven by rising food prices- a category that directly affects household budgets. Food and non-alcoholic beverage (FNAB) inflation rose to 5.1% YoY in June from 4.8% in May. A sharp increase in meat prices (up 2.2% MoM and 6.6% YoY) offset slower price growth in bread and cereals, where inflation eased to 3.0% YoY from 4.5%. For consumers, this mix means that whilst staple grain-based foods have become more affordable, protein sources (particularly beef) are weighing more heavily on grocery bills.
Globally, food price trends remain mixed. The UN’s Food and Agriculture Organization (FAO) reported that its Food Price Index (FFPI) averaged 128.0 points in June 2025, up 0.5% from May and 5.8% higher than a year earlier. Nevertheless, as global prices for cereals and sugar fell, increases in dairy, meat, and vegetable oils more than offset those declines. Whilst still far below the March 2022 peak, these shifts matter for SA, given its reliance on imported products like palm oil and specific meat cuts. The FAO Cereal Price Index fell by 1.5% MoM and 6.8% YoY, primarily due to strong maize harvests in Brazil and Argentina, and improved US production prospects. Wheat prices saw a short-lived spike on weather concerns in major producers before stabilising on the back of bumper crop forecasts. SA’s maize prices followed global patterns: white maize dropped 2.8% MoM and 9.7% YoY, while yellow maize dipped 0.6% MoM but stayed above last year’s levels. Locally, the Crop Estimates Committee (CEC) expects a 26.3% jump in white maize output and a 5% rise in yellow maize production for the 2024/2025 season- positive news for both consumers and livestock producers, as it should help lower feed costs and keep future food inflation contained.
In the meat sector, however, pressures are building. The FAO Meat Price Index climbed 2.1% MoM and 6.7% YoY, with beef prices hitting record highs due to supply constraints in Brazil and strong US demand. Locally, beef carcass prices surged 12.9% MoM and a staggering 38.3% YoY in June, exacerbated by reduced slaughter volumes amid ongoing foot-and-mouth disease (FMD) outbreaks. This not only pushes up consumer prices for beef but also strains restaurants, retailers, and the hospitality sector, which may pass higher costs down the line.
The poultry industry also remains under pressure. After a nine-month break, new outbreaks of the highly pathogenic avian influenza (HPAI) in the North West and Mpumalanga have resulted in bird losses and heightened biosecurity risks. While the recent lifting of Brazil’s export ban should ease supply pressures somewhat, the price of individually quick frozen (IQF) chicken pieces still rose 1.2% MoM and 21.3% YoY. This is significant for low- to middle-income households, where chicken remains the most affordable protein source.
Vegetable oil prices remain elevated globally, driven by palm oil demand, a concern for SA given its heavy reliance on imports. However, better local canola and sunflower harvests could soften the blow. In fresh produce, potatoes and onions became more affordable in June, with potato prices hitting their lowest levels since late 2022, a small but welcome relief for consumers.
The bottom line
From a broader economic standpoint, the relatively stronger rand has helped buffer South Africans from steeper import-driven inflation. However, this currency strength is vulnerable, particularly to shifts in US political and economic conditions, which could quickly influence local fuel and food costs. Encouragingly, strong domestic harvest forecasts and stabilising supply chains suggest food price inflation could ease in the coming months. Nonetheless, risks remain in the form of recurring animal disease outbreaks, global commodity volatility, and energy costs, which could quickly reintroduce upward price pressures. In short, while the inflation trend is still within a safe range, the balance between local resilience and global volatility will be key to keeping food prices and broader inflation stable in the months ahead.
Small sector gains fail to shift SA’s high unemployment burden
SA’s official unemployment rate in 2Q25 rose to 33.2%, up 0.3 ppts from the 32.9% recorded in 1Q25. The labour absorption rate (a measure of the proportion of the working-age population that is employed) edged down slightly to a still-subdued 40.2%, underscoring the fragility of the domestic job market. Overall economic conditions remain weak, with the SARB forecasting GDP growth for the year at just 0.9%. Moreover, both global and domestic factors continue to weigh on sentiment and investment. On the international front, the US’s protectionist trade policies have added uncertainty, while local structural challenges, ranging from infrastructure bottlenecks to ongoing loadshedding, continue to limit growth potential.
Employment trends in 2Q25 reflected a mixed picture. Modest job gains were recorded in the formal non-agricultural sector and private households, but these were outweighed in part by losses in other segments. The informal non-agricultural sector shed 19,000 jobs, while agricultural employment fell by 24,000 positions- a drop that could deepen should US tariffs on agricultural goods lead to a further contraction in certain sub-sectors. Five of the eight formal sector industries surveyed recorded employment growth compared to 1Q25. The manufacturing sector added 19,000 jobs, trade gained 16,000, and finance saw an increase of 13,000. However, these gains were not evenly distributed geographically. While the Western Cape continues to post the lowest unemployment rate nationally, it shed 117,000 jobs over the quarter. Analysts note a “reverse semigration” trend, as back-to-office mandates and rising living costs prompt some workers to return to Gauteng.
Youth remain the most vulnerable in the labour market. Among those aged 15–24, unemployment remains critically high at 62.2%, essentially unchanged from the previous quarter. Education remains a decisive factor: according to Stats SA, individuals without a matric faced an unemployment rate of 39.4% in 2Q25, compared to just 12.2% for graduates. The expanded unemployment rate, which includes discouraged work seekers (i.e. individuals who are available for work but not actively seeking it), eased marginally to 42.9% from 43.1% in the previous quarter. However, it is still 13.4% higher than in the same period in 2008, illustrating the long-term deterioration in the labour market.
It is worth noting that official headline unemployment data do not necessarily reflect the full scale of the crisis. The Quarterly Labour Force Survey (QLFS), which covers formal, informal, and agricultural sectors, has diverged sharply from the Quarterly Employment Statistics (QES), which only reports on the formal sector. Moreover, headline figures exclude discouraged workers and do not adequately capture underemployment or job quality- factors that leave many trapped in low-skilled, insecure, and low-paying work. It is worth noting that Stats SA has announced that it will launch an enhanced QLFS survey from 3Q25, which will include updated definitions of the informal sector and informal employment. The agency has noted that its updated framework is “expected to significantly alter informality data.”
The bottom line
Historically, SA has only seen meaningful job creation when GDP growth approaches 3% p.a. SA’s unemployment crisis remains deep-rooted and multifaceted. Addressing it will require coordinated, long-term strategies spanning government, business, labour, and civil society to create inclusive, sustainable opportunities—particularly for young people and those without formal qualifications. Without stronger and more consistent economic growth, the prospect of materially reducing unemployment will remain out of reach.
