South African Reserve Bank governor Lesetja Kganyago. The Sarb already warned in March that the ongoing Middle East conflict is a clear instance of a supply shock, which raises prices while weakening demand. Image: Supplied
South African consumers could face a double blow in June as economists predict the South African Reserve Bank (Sarb) to raise interest and the government will end the R3-per-litre fuel levy relief.
The recent relief has helped motorists cope with rising global oil prices. The Sarb’s Monetary Policy Committee (MPC) is likely to take a hawkish stance on Thursday after inflation rose from 3.1% in March to 4.0% in April, mainly due to increasing fuel costs linked to the ongoing Middle East conflict.
Several economists now warn that inflation could climb closer to 5% in the coming months, increasing pressure on the Sarb to act pre-emptively to prevent higher prices from becoming entrenched in the economy.
The Sarb already warned in March that the ongoing Middle East conflict was a clear instance of a supply shock, which raises prices while weakening demand. The central bank said waiting for clear evidence risks leaving the policy response too late.
According to Nedbank economists Johannes (Matimba) Khosa and Nicky Weimar, the sharp jump in petrol and diesel prices has already started filtering through to broader transport and operating costs, pushing core inflation higher and increasing the risk of second-round inflation effects.
Nedbank acknowledged that the MPC had some space to wait and see how the global supply shock unfolds, as monetary policy remained moderately restrictive and the usual accelerants of spiking risk premia and significant rand weakness have not yet materialised.
“Despite these valid considerations, our analysis suggests that inflation expectations are particularly sensitive to petrol price increases, and we, therefore, see a relatively high risk of second-round effects,” they stated.
“As such, tightening monetary policy now would ensure that the inflationary consequences of the supply-side shock are temporary and likely minimise the need for more severe tightening later in the cycle.”
Nedbank expected the Sarb to raise the repo rate by 25 basis points to 7%, which would push the prime lending rate to 10.50%.
Adriaan Pask, chief investment officer at PSG Wealth, said the Sarb faced a difficult balancing act between protecting economic growth and defending its inflation credibility.
He argued that while higher fuel and electricity prices were largely supply-side shocks that interest rates could not directly solve, the Sarb could not risk appearing complacent about inflation drifting away from its preferred 3% target.
“The more durable solution lies in reforms that reduce supply-side costs, improve productivity and give South Africa a stronger, more sustainable growth platform,” Pask said.
However, the prospect of another rate increase is likely to deepen pressure on already heavily indebted households.
Workers and consumers are simultaneously facing rising transport costs, electricity tariff increases and expensive food and credit costs, while economic growth remains sluggish.
But beyond food prices, activists say the hunger crisis is also exposing deep government failures.
The coalition is now demanding an urgent national food plan, the creation of a national food council, and legal accountability for child deaths from malnutrition.
With the cost-of-living soaring, activists warn that hunger in South Africa is no longer just a charity issue, but a political emergency.
As protests and boycotts loom, pressure is mounting on government and big business to respond.
Analysts warned that although there is great potential upside with Pick n Pay, it carries significant risks based on a successful turnaround strategy.
They shared these comments after Pick n Pay released its audited annual financial statements for the 2026 financial year.
These statements contained many positives, including steady progress in its multi-year turnaround strategy and underlying operational improvements.
To fund this ongoing strategy, Pick n Pay disposed of a 12.5% stake in Boxer, raising R4.7 billion in gross proceeds.
Another positive was that the retailer’s overall level of debt decreased from R1.2 billion to just R200 million at the close of the 2026 financial year.
The remaining R200 million was repaid after the reporting date, leaving the Pick n Pay Group with no long-term debt.
Pick n Pay’s Online segment was another positive, with a 32.7% increase in turnover and successfully meeting its profitability targets.
There were also many concerning things in the numbers, including deepening trading losses in Pick n Pay’s core segment.
Group trading profit declined 4.2% to R1.7 billion, due to a R404 million increase in the core Pick n Pay segment’s trading loss to R1.0 billion.
Trading expenses as a percentage of turnover in the Pick n Pay segment rose to 21.7%, driven by above-inflation wage increases and higher advertising costs.
This showed that the turnaround still has a long way to go. It pushed out its break-even target for the Pick n Pay segment to the 2029 financial year, rather than 2028.
Turnover for the Pick n Pay segment declined 1.6%, largely due to the store estate reset program involving store closures and conversions.
It also continues to burn through cash. Its net cash reduced from R4.2 billion at the end of the 2025 financial year to R3.1 billion at the end of the 2026 financial year.
Pick n Pay has also initiated a Section 189A statutory consultation process to restructure its store labour model, which creates uncertainty.
Pick n Pay CEO Sean Summers’ feedback
Pick n Pay CEO Sean Summers
Pick n Pay CEO Sean Summers remains upbeat about the retailer’s prospects, saying the turnaround strategy remains firmly on track.
“The turnaround is supported by improving topline growth, renewed operational disciplines, and careful cash management,” he said.
“While Pick n Pay’s trading loss increased, the business today is fundamentally stronger than it was two-and-a-half years ago.”
He cited the steady improvement in company-owned Pick n Pay supermarket like-for-like sales growth and a 0.4% increase in gross profit margin.
Summers added that the company now has the balance sheet strength to support its return to profitability. However, it still needs a lot of work.
“Achieving break-even in Pick n Pay requires the successful execution of all six strategic initiatives, including the recalibration of our total employment costs,” he said.
The retailer is addressing its structurally high store labour costs through a formal Section 189 consultation process.
“One of the first issues I raised on my return was that we needed to address Pick n Pay’s significantly distorted labour cost base relative to competitors,” he said.
“Our objective is clear: to align our cost structure with industry standards while safeguarding jobs wherever possible.”
The Pick n Pay CEO said the company’s store estate reset is effectively done, and it has achieved some of the key milestones needed to achieve growth.
“We continue to see encouraging progress across the business, but the reality is that the challenges facing Pick n Pay developed over an extended period,” he said.
“This means that rebuilding the business into a leading supermarket retailer again will take time, disciplined execution and difficult but necessary decisions.”
Analyst opinion about Pick n Pay
Jonathan Fisher, a wealth manager at PSG Wealth Sandton, described Pick n Pay’s latest results as a “shocker”.
He said that although Pick n Pay managed to decrease its headline loss per share, the overall financial results were not good.
“The market’s negative reaction, with the share price declining 5% on the day, shows investors aren’t buying the turnaround narrative yet,” he said.
He described Pick n Pay’s turnaround as “a huge oil tanker that’s really trying to turn around but is just not turning”. “It’s taking forever,” he said.
He said the entire consumer market is under massive pressure, and that there are better alternatives in the retail sector, such as Shoprite.
Simon Brown from JustOneLap was also negative about Pick n Pay, pointing to the turnaround timeline, which gets moved out again and again.
He also flagged the ongoing Section 189 staff retrenchment process as an operational risk, especially if it leads to strike action.
Brown said Pick n Pay’s core brand is moving in the wrong direction and losing ground to competitors like Woolworths and Checkers.
“Pick n Pay is pulling back, dropping leases, and closing stores while its competitors are aggressively opening new stores,” he said.
Brown and Fisher highlighted that there is massive potential upside if Pick n Pay’s turnaround is successful. However, it is not guaranteed.
This means Pick n Pay is currently a highly speculative investment that carries significant risks associated with the turnaround.
Pick n Pay’s 2029 Problem Is Bigger Than a Delayed Target
A year can sound small until investors hear it.
For Pick n Pay, the move from 2028 to 2029 is not just a calendar adjustment. It is a signal. It tells the market that the retailer’s recovery is taking longer than hoped, and it tells South Africans that one of the country’s most familiar supermarket brands is still fighting its way back.
Gareth Edwards and Francis Herd use 2029 as the Number of the Day to examine a turnaround story that has become about much more than profit.
On paper, the issue is simple. Pick ‘n Pay’s core supermarket business is still under pressure, and its expected break-even point has been pushed out by a full year. Investors did not like that. The share price came under pressure after the results, reflecting frustration that the recovery has not moved quickly enough.
But behind the market reaction is a much bigger retail story.
Pick ‘n Pay used to occupy a special place in South African shopping culture. For many households, it was part of the weekly rhythm. The familiar aisles. The family shop. The retailer people felt they knew.
That world has changed.
Checkers and Shoprite are now operating with serious momentum. Checkers Sixty60 has turned convenience into an expectation, not a luxury. Once consumers get used to groceries arriving fast, the entire retail battlefield shifts. It is no longer enough to have stores, stock and history. Retailers now have to deliver speed, range, value, digital convenience and trust at the same time.
That is the pressure Pick ‘n Pay is trying to answer.
Sean Summers returned as CEO with a reputation for crisis management and a difficult mandate: stabilise the business, rebuild confidence, sharpen operations and get the core supermarket brand back to sustainable performance.
But turnaround plans are never just spreadsheets.
The human cost sits inside the labour discussion. Pick ‘n Pay is restructuring, and staff costs have become one of the major pressure points. Gareth and Francis discuss Sunday pay, working conditions, union concern and the reality that changing people’s pay is never just a financial decision. It affects families, morale and the people who keep stores running.
That is where the story becomes uncomfortable.
A struggling business may need to reduce costs to survive. Workers need stability and fair treatment. Shoppers want value. Investors want progress. Each group is looking at the same company, but not asking the same question.
For investors, the question is: when will the numbers improve?
For workers, it is: what happens to my pay and my job?
For shoppers, it is: why should I choose Pick ‘n Pay now?
For Sean Summers, the question may be the hardest of all: can he rebuild the business before patience runs out?
2029 is the new target. But the real deadline may arrive much sooner, in the choices shoppers make every week, the negotiations with workers, and the market’s willingness to believe that the comeback is still alive.
After a difficult few years, Pick n Pay says its turnaround is gaining traction, with improving earnings guidance and renewed focus on operational recovery. But the road ahead remains complex. The retailer has pushed out its break-even target for its core supermarket business by a year to FY2029, even as Boxer continues to outperform, competitive pressures intensify and global geopolitical risks cloud the consumer outlook. Joining CNBC Africa is Pick n Pay CEO, Sean Summers.
Illustrative image: Trolley (Graphic: Freepik) | Pick n Pay logo (Source: picknpay.coza)
Pick n Pay is in a tough spot – wanting to improve the customer experience for SA’s savvy shoppers as well as its operational efficiency, yet facing resistance from workers over proposed changes in shifts and pay. All that, and it must keep its investors happy, who are concerned about its decision to sell R4.7-billion worth of shares in Boxer.
The other day I had an excellent breakfast with a friend and found myself with a few minutes before I had to do my usual dash around the potholes to my first port of work for the day.
Finding myself at a loose end in a shopping centre, without the fun company of any of my family members, my first pang was one of guilt.
Should I really be here? Without looking at my Google Keep shopping list of reasons to be at the mall at this particular time.
I decided to put away my pang of guilt (I have some practice at this) and walk to the bottom floor to see what I could see.
There was a Pick n Pay liquor outlet. And idly browsing the Irish medicinal section I realised, with something of a start, that a particular item was on a massive special.
In fact, owing to a global glut of high-quality Irish medicine (Really, I’m not making this up), there are some good prices around. And there was one on offer. In fact, it was literally a third off.
Out of duty to a friend I felt I needed to buy two, which would save me literally the full price I would now pay per bottle.
With a start I realised I had never bothered, never felt the need until that moment, to get a Pick n Pay Smart Shopper card. I had not been into one of their stores to actually buy something for that long.
Obviously, I did the rational thing, got the card (to make a friend happy) and ran out of the mall before anything else could happen.
Turnaround strategy
In a way, this is Pick n Pay’s fundamental problem.
While Boxer is doing incredibly well, the turnover at Pick n Pay supermarkets was down 1.6%.
Now, the group will say, correctly, that one of the reasons for this is that it shut some of their stores during the period. And this was part of the turnaround plan.
As Pick n Pay CEO Sean Summers has previously explained, it made no sense to keep its big branch at Hyde Park in Joburg when the design of the store did not work for the group (in particular, he said it meant the group was paying for non-public space behind the store that came to around half the rent – of course, Checkers has taken the gap at Hyde Park).
But what really spooked investors last week was the announcement that Pick n Pay was selling R4.7-billion worth of its shares in Boxer. While it still has a controlling share (it now owns just more than 53%) it really looks like the group is selling what’s working to fund what’s not.
And it is doing this in the teeth of the toughest competition one can find.
Meanwhile, just up your street…
Checkers seems to have all the advantages at the moment. It is ahead in its delivery service; its corporate structure (it owns all its stores) allows it to invest in that service more easily (like Spar, Pick n Pay doesn’t own all its stores making this more difficult); it has huge momentum; and it’s able to keep its pricing down.
The real problem I think for Summers and Pick n Pay is simply to get people in through the doors.
And to do that, the group needs to make my experience better than anywhere else, and it needs to be cheaper.
But as previously discussed in this newsletter, in South Africa, you’re dealing with the best shoppers in the world. The nature of our society and the incredible pressure on promotions have created a group of people who plan their shopping and literally feed their families through the clever use of promotions.
Unlike the ultimate lazy shopper such as myself, they have all the cards and are not afraid to use them.
And Summers has to do all of this with workers who might well resist the major changes that are coming their way.
Workers’ perspective
The union Saccawu has condemned the changes, blasting management for introducing a Section 189 process.
While it is not the role of this newsletter to advise union leaders, if I were them, I would tread a little carefully here.
Pick n Pay says it’s not planning to fire or retrench people. It wants to change the shift system to make sure there are more workers in their stores on weekends and outside office hours. The reason is obvious – that’s when you shop.
But this will mean workers will, for example, get paid less for working on a Sunday.
If I were one of those workers I would be angry at that too – my life is about to be fundamentally changed and I might end up poorer.
But if this process goes badly, if Summers and those with him fail in turning around Pick n Pay, they might just be out of work completely. Because then this programme will move from changing shift patterns to actual retrenchments.
And if you used to work at Pick n Pay, you will have no option but to hope you can work for Checkers, which already uses the kind of shift pattern that Pick n Pay wants to emulate.
It reminds us that just because you haven’t been into a store for a while doesn’t mean it’s not important.
Pick n Pay is in a tough spot, it needs to make us all want to go to its stores to shop more often. And to spend more money. And to get Smart Shopper cards.
And if it fails to do that, the knock-on effects will be ghastly to contemplate. DM
