John Manyike | Head | Financial Education | Old Mutual | mail me |
While global geopolitical tensions may feel distant, their financial impact is hitting South Africans closer to home than many realise.
From rising fuel prices to mounting inflationary pressure, experts warn consumers about what many now describe as the “unseen tax” on everyday living. In fact, geopolitics drives “unseen tax” in ways that quietly shape household expenses.
Global instability quietly erodes household budgets in ways many consumers underestimate. As a result, geopolitics drives “unseen tax” effects that often go unnoticed until financial strain becomes unavoidable.
South Africans are engaging in conversations about global tensions around the braai, often in a casual way. However, many do not realise that these events have a direct and measurable impact on their personal finances. This is what we refer to as the unseen or silent tax.
Global ties and local consequences
South Africa’s integration into global economic structures such as the G20 and BRICS brings both opportunity and vulnerability. While participation strengthens the country’s global standing, it also exposes consumers to the ripple effects of international disruptions, particularly in energy markets. Consequently, geopolitics drives “unseen tax” pressures that filter down into daily expenses.
Recent oil supply interruptions linked to the war in the Middle East have already driven sharp increases in global fuel prices. In response, the Government of South Africa introduced a temporary R3 per litre reduction in the general fuel levy from 1 April to 5 May 2026 to cushion consumers. However, this relief remains limited. South Africans faced sharp petrol and diesel price increases in April. Prices are also set to rise further in May.
While the intervention provides short-term breathing room, it does not remove the underlying pressure. There is a real risk that the relief we see now could translate into higher inflation or interest rate pressure later when the levy is reinstated.
Rising costs and broader economic strain
For consumers, the implications are immediate and personal. Rising transport costs will also feed into the prices of goods and services more broadly. However, the extent depends on whether businesses absorb those costs or pass them on to consumers.
When businesses pass on costs, they tighten already strained household budgets and reduce disposable income. Of particular concern, fertiliser supplies have also been interrupted by the war. This disruption could put upward pressure on food prices. While central banks are approaching this global supply shock cautiously, they remain mindful of uncertainty. However, they could raise interest rates if they see inflationary pressures broadening beyond fuel prices.
– Izak Odendaal, investment strategist at Old Mutual Wealth
This could also happen in South Africa, although it is too soon to say. The South African Reserve Bank can probably afford patience while assessing the situation. Inflation was on target at 3% in February before the war. Meanwhile, its policy interest rate was due to fall from an elevated level.
Ultimately, the outcome depends on how long the conflict lasts, as it continues to disrupt supplies and keep energy prices elevated. It also depends on how the Rand-Dollar exchange rate responds. While it fell somewhat when the war broke out, it has remained relatively stable compared to previous global crises.
Practical steps to protect your finances
South Africans are urged to take the following four proactive steps to safeguard their financial wellbeing during this period of uncertainty:
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Build or strengthen your emergency fund
If you do not already have an emergency fund, start building one as a matter of urgency. Even small, consistent contributions can make a meaningful difference over time. This financial buffer helps you absorb unexpected shocks. These include rising fuel costs, higher interest rates or sudden expenses. It also reduces reliance on credit.
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Eliminate unnecessary spending
Take a close and honest look at your monthly budget. Identify areas of non-essential spending. Subscriptions, impulse purchases and lifestyle expenses can quietly erode financial stability. Cutting these out completely, even temporarily, can free up cash. This approach strengthens your financial position during uncertain times.
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Postpone discretionary purchases
Now is not the time for large, non-essential financial commitments. Consider delaying planned expenses such as holidays, new electronics, home upgrades or vehicle purchases. Preserving liquidity and maintaining flexibility will place you in a stronger position as economic conditions evolve.
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Avoid taking on additional debt
In a rising cost environment, additional debt can quickly become difficult to manage, especially if interest rates increase further. Focus instead on maintaining or reducing your current debt levels. Taking on new financial obligations now could limit your ability to respond to future financial pressure.
It is important to work closely with a financial adviser. These decisions should not be made in isolation. A financial adviser will help ensure that any adjustments you make remain aligned with your long-term financial plan and goals. Many people also worry about how the war in the Middle East will impact their retirement savings. The good news is that while markets have been volatile, they have performed better than many expected. In these unsettling times, it is another reminder of why we always say ‘time in the markets, not timing the markets’.
Do not base your investment strategy on news headlines. Definitely do not rely on social media posts. In most cases, a person’s investment strategy should not change in response to market conditions. Instead, it should change in response to shifts in personal circumstances. Financial advisers are best placed to guide these decisions.
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Switch to affordable brands
According to our Savings and Investments Monitor, many South Africans are switching to cheaper supermarkets and affordable brands to cope with the rising cost of living. Some are cutting back on subscription television. Others are exploring streaming options instead.
From awareness to action
With no clear timeline for how long geopolitical tensions will persist, and with the possibility that economic effects may linger long after conflicts subside, we caution against complacency.
The risk is not just what is happening now. It also includes what could follow. Consumers need to move from passive observers of global events to active participants in their own financial resilience. Furthermore, taking action early can prevent more severe consequences later. It is far better to make controlled sacrifices now than to face reactive decisions later.
For example, taking on debt just to cope can create long-term financial strain that outlasts the current crisis.
As headlines about global geopolitical tensions continue to dominate daily conversations, South Africans are encouraged to shift the discussion from the braai to a meeting with their financial advisers. Ultimately, geopolitics drives “unseen tax” realities that require deliberate and informed responses.
The unseen tax is already here. However, the real question is whether consumers are prepared to respond in a way that protects their financial future.
