Section 31.0

Scope, Method, and Context

This section examines the cost of living and household economic stress in Mauritius over the period 2015 to 2025, moving beyond headline inflation to assess how price dynamics, wages, consumption patterns, and income structures translate into lived economic pressure. While macroeconomic indicators suggest relative price stability in recent years, public discourse and survey evidence point to persistent strain at the household level. This apparent divergence between measured inflation and perceived hardship forms the core analytical problem addressed in this section.

Cost of living is not synonymous with inflation. Inflation captures the average movement of prices across a defined consumption basket, whereas household stress reflects the interaction between prices, income, employment stability, consumption rigidity, and access to buffers such as savings, credit, or public support. In economies with high import dependence, concentrated consumption patterns, and limited income diversification, modest inflation rates can still generate significant stress when essential goods account for a large share of household expenditure. Mauritius exhibits several of these structural characteristics.

The section therefore adopts a household-centred analytical lens. It draws on verified institutional data from Statistics Mauritius, the Bank of Mauritius, the International Monetary Fund, the International Labour Organization, and preliminary findings from the 2023 Household Budget Survey. Where official data are unavailable, outdated, or not publicly released, these gaps are explicitly identified and treated as findings in their own right rather than filled through inference. No synthetic estimates are introduced without institutional backing.

The temporal scope of 2015 to 2025 allows for the assessment of pre-pandemic conditions, the COVID-19 shock, post-pandemic price adjustments, and the more recent period of global inflation driven by energy, food, and supply-chain disruptions. This timeframe also captures multiple minimum wage adjustments, shifts in household income and expenditure patterns, and changes in the composition of inflation between domestic services and imported goods.

Methodologically, the section proceeds in three steps. First, it reviews price dynamics and the evolution of the cost of essential goods, distinguishing between headline inflation, core inflation, and components most relevant to low- and middle-income households. Second, it examines wages and household incomes, with particular attention to the relationship between nominal increases and real purchasing power. Third, it analyses household consumption structures to assess exposure to price shocks and the degree of flexibility available to households in adjusting expenditure.

On this basis, the section introduces a Household Stress Index as an analytical framework rather than a statistical claim. The index is designed to synthesise multiple dimensions of pressure that are not captured by inflation alone, including expenditure rigidity, income growth relative to prices, and the absence of measurable financial buffers. The index does not replace official statistics; it organises them to highlight distributional and structural stress.

Finally, this section is explicitly linked to subsequent chapters. Household stress conditions inform public sentiment, labour market behaviour, political trust, entrepreneurial risk-taking, and social stability. The findings here therefore provide essential context for later sections on public sentiment, entrepreneurship under constraint, and the broader implications for citizens and institutions.

Section 31.1

Prices, Inflation, and the Cost of Essentials

Price dynamics in Mauritius between 2015 and 2025 present a paradox that sits at the heart of household stress. Headline inflation has remained relatively contained by international standards in the most recent period, yet the cost of living continues to dominate public concern. Understanding this divergence requires disaggregating inflation into its components and examining which prices matter most to households, rather than relying on aggregate averages.

By mid-2025, headline consumer price inflation stood at approximately 3 percent year-on-year, with monthly movements indicating temporary easing in certain food categories. Core inflation measures, however, reveal a more complex picture. Core indices excluding volatile food and energy items remained elevated relative to headline figures, reflecting persistent price pressure in services and imported goods. This matters because services and imported essentials are precisely the components over which households have the least short-term flexibility.

Food and non-alcoholic beverages occupy a central position in Mauritian household budgets. Preliminary household expenditure data indicate that food accounts for roughly one quarter of total household consumption. In practical terms, this means that even modest price increases in food items translate into immediate pressure on disposable income, particularly for lower- and middle-income households. While monthly food inflation showed short-term declines in mid-2025, the cumulative price level of food remains structurally higher than in the pre-pandemic period, reflecting global supply shocks, freight costs, and exchange-rate pass-through.

Imported inflation plays an outsized role in shaping the cost of essentials. Mauritius relies heavily on imported food, fuel, and manufactured consumer goods. As a result, domestic inflation is not only a function of local demand conditions but also of global commodity prices and foreign exchange movements. Core inflation measures capturing imported price pressures remained notably higher than headline inflation during parts of 2024 and 2025, underscoring the sensitivity of household budgets to external shocks over which domestic policy has limited control.

Housing-related costs further compound the pressure. While owner-occupied housing is treated differently within the consumer price index framework, households still face rising costs related to rent, maintenance, utilities, and municipal services. Electricity, water, and waste-related charges form part of the essential expenditure basket and are largely non-discretionary. In an environment where wage growth lags cumulative price increases, these fixed costs compress the share of income available for discretionary spending.

Transport costs represent another channel through which inflation translates into household stress. Fuel prices, whether directly reflected at the pump or indirectly embedded in the cost of goods and services, affect commuting, food distribution, and access to employment. Even when headline fuel inflation moderates, price levels often remain elevated relative to earlier periods, locking in a higher cost base for households.

The Averaging Problem: Why Headline Inflation Understates Stress

A critical limitation of headline inflation as a welfare indicator lies in its averaging effect. Inflation measures reflect the weighted average price movement across a representative basket, but households do not experience the basket uniformly. Lower-income households devote a larger share of income to food, transport, and utilities, while higher-income households allocate more to discretionary services. As a result, two households facing the same official inflation rate may experience very different real pressures. This distributional dimension is not captured in standard CPI releases.

The period from 2020 onwards illustrates this clearly. Pandemic-era disruptions and subsequent global price shocks raised the level of essential prices faster than those of discretionary items. Even as inflation rates later stabilised, households adjusted to a permanently higher price level for necessities. Inflation slowed, but the cost of living did not fall back. For households with limited savings or volatile income streams, this shift translated into sustained stress rather than a temporary shock.

In summary, the inflation environment in Mauritius over the past decade cannot be assessed solely through headline figures. Moderate inflation rates coexist with high exposure to essential goods inflation, strong import dependence, and limited short-term adjustment capacity. These structural characteristics explain why cost-of-living pressures persist even when macroeconomic indicators suggest relative price stability. This sets the stage for the next subsection, which examines whether wage and income dynamics have been sufficient to offset these pressures in real terms.

Household Stress Evolution 2015-2025: Three Critical Periods

Understanding current household stress requires recognizing how pressure accumulated over time. The decade divides into three distinct periods, each leaving permanent marks on household resilience.

Section 31.2

Wages, Incomes, and Purchasing Power

If prices define the pressure households face, wages and incomes determine whether that pressure can be absorbed. In Mauritius between 2015 and 2025, income dynamics show a pattern of nominal improvement accompanied by far more modest gains in real purchasing power. This gap between measured income growth and lived affordability is central to understanding household stress.

Minimum wage policy has been one of the most visible labour market interventions during the period. The statutory minimum wage has been adjusted upward several times since its introduction, rising notably in the early 2020s and reaching an estimated level above MUR 17,000 per month by the 2025–2026 period. These adjustments represent a substantial nominal increase relative to earlier levels. However, consistent official time series tracking minimum wage evolution back to 2015 are not publicly released in national statistical publications, limiting the ability to assess cumulative real gains over the full decade.

Beyond the minimum wage, average earnings data provide a broader view of labour income. Available international labour statistics indicate that average monthly earnings for employees stood at roughly MUR 32,000 to 33,000 by 2024. While this figure suggests a widening gap between minimum and average wages, it also masks substantial variation across sectors, contract types, and employment status. High-income sectors such as financial services coexist with low-wage employment in retail, agriculture, construction, and informal services, producing uneven income outcomes across households.

Household income data from the most recent Household Budget Survey offer important context. Preliminary results indicate that nominal household disposable income increased sharply between 2017 and 2023, with cumulative growth exceeding 50 percent. When adjusted for inflation, however, real income growth over the same period is estimated at closer to 20 percent. This distinction is critical. While incomes rose, much of the increase compensated for higher prices rather than translating into improved purchasing power.

Median and average income figures further illustrate the distributional dimension. Median monthly household disposable income in 2023 was approximately MUR 45,000, while the average stood closer to MUR 55,600. The gap between median and average incomes indicates income skewness, with higher-income households pulling up the average. For households clustered around the median, income growth has been less able to buffer rising living costs, particularly where multiple earners are not present.

Purchasing Power Erosion and Wage Rigidity

Purchasing power erosion becomes clearer when income trends are considered alongside expenditure patterns. Household consumption expenditure increased broadly in line with income over recent years, suggesting limited scope for savings accumulation. In other words, income gains have largely been absorbed by higher living costs rather than converted into financial buffers. This dynamic leaves households more exposed to shocks, even in periods of stable employment.

Another important constraint is the rigidity of wage adjustment mechanisms. Many wages adjust episodically rather than continuously, often lagging behind price increases. Inflation may rise quickly, while wage revisions occur annually or less frequently. During periods of imported inflation or supply-driven price shocks, this lag temporarily but meaningfully reduces real purchasing power, particularly for fixed-income households and minimum-wage earners.

Public transfers and pensions provide partial offsets for some groups, but they do not cover the full working-age population. Moreover, data on the combined effect of wages, transfers, and taxes on net household income are not published in an integrated, regularly updated format. This limits the ability to assess how fiscal measures mitigate or amplify cost-of-living pressures across income groups.

In summary, wage and income growth in Mauritius over the past decade has been real but constrained. Nominal increases have outpaced inflation only modestly, and income distribution remains uneven. For a large share of households, rising earnings have primarily preserved consumption levels rather than improved economic security. This explains why cost-of-living concerns persist even as income indicators appear positive in aggregate. The next subsection turns to household consumption patterns to assess how these income dynamics interact with spending structure and flexibility.

Section 31.3

Household Consumption Patterns and Exposure to Price Shocks

Household consumption patterns determine how income and price dynamics translate into lived economic pressure. In Mauritius, available expenditure data reveal a consumption structure that leaves households particularly exposed to price shocks, even when inflation remains moderate. The rigidity of essential spending plays a decisive role in shaping household stress.

Preliminary findings from the most recent Household Budget Survey indicate that average household consumption expenditure reached approximately MUR 41,870 per month in 2023. This level of spending broadly mirrors disposable income growth over the same period, suggesting that households have limited scope to reduce expenditure without directly affecting living standards. The alignment between income and consumption growth implies that most households are operating close to their budget constraint rather than accumulating significant savings.

The composition of expenditure is more revealing than the aggregate level. Food and non-alcoholic beverages account for roughly one quarter of total household spending. This share is high by international standards for an upper-middle-income economy and reflects both cultural consumption patterns and structural price conditions. Food expenditure is largely non-discretionary. Households can substitute between products, but they cannot meaningfully reduce caloric intake or basic nutrition without welfare consequences. As a result, food price increases have an immediate and unavoidable impact on household budgets.

Housing-related expenses constitute another rigid component. While owner-occupied housing costs are treated differently within inflation measurement frameworks, households nonetheless incur regular expenditures on rent, utilities, maintenance, and local charges. These costs tend to rise steadily over time and are only weakly responsive to short-term income changes. For renters, housing costs represent a fixed contractual obligation that cannot be adjusted downward when income is squeezed.

Transport expenditure further amplifies exposure to price volatility. Commuting costs, fuel prices, and transport services affect access to employment, education, and essential services. In an import-dependent economy, fuel price movements and exchange-rate pass-through raise transport costs directly and indirectly. Even households that do not own vehicles face higher prices through public transport fares and higher distribution costs embedded in goods prices.

Discretionary spending categories such as recreation, clothing, and non-essential services account for a smaller share of total expenditure, particularly among lower- and middle-income households. This limits households' ability to absorb shocks by cutting back on non-essential consumption. When prices rise, adjustment occurs through reduced quantity or quality of discretionary goods, but once these margins are exhausted, pressure shifts to essentials or debt accumulation.

Distributional Differences in Consumption Exposure

Consumption patterns also differ across income groups. Higher-income households devote a smaller share of spending to food and basic utilities, granting them greater flexibility in response to price changes. Lower-income households, by contrast, are structurally constrained. A higher essentials share means that inflation in food, transport, or utilities translates almost one-for-one into reduced discretionary space. This asymmetry contributes to divergent perceptions of economic conditions within the same macroeconomic environment.

Over the 2015 to 2025 period, structural changes in consumption have been gradual rather than transformative. While nominal expenditure levels increased, the underlying composition remained broadly stable. This persistence indicates that economic growth has not fundamentally altered household consumption profiles or reduced exposure to essential price shocks. Instead, households have adapted to higher price levels without achieving greater resilience.

In sum, household consumption patterns in Mauritius are characterised by high expenditure rigidity and strong exposure to essentials inflation. This structure magnifies the impact of even modest price increases and limits households' capacity to adjust without welfare loss. The next subsection examines how households manage the balance between income and expenditure over time and what this implies for financial resilience and stress.

International Comparison: Household Resilience Indicators

Placing Mauritius' household stress patterns in international context reveals whether observed pressures are typical for upper-middle-income small island economies or whether they indicate structural vulnerabilities. Comparison with peer economies—Singapore (high-income city-state), Seychelles (small island upper-middle-income), and Barbados (Caribbean upper-middle-income island)—provides benchmarks for household resilience.

Section 31.4

Income–Expenditure Balance, Financial Resilience, and Coping Capacity

The interaction between household income and expenditure determines not only current living standards but also the capacity to withstand shocks. In Mauritius, available evidence from 2015 to 2025 suggests that households have largely maintained balance between income and consumption, but at the cost of limited resilience. Stability in aggregate figures masks fragility at the household level.

Data from institutional sources indicate that real household income and real consumption expenditure grew at broadly similar rates between 2017 and 2023. Real income is estimated to have increased by just over 20 percent, while real expenditure rose by slightly less. At first glance, this parallel movement suggests that households have managed to keep pace with rising costs. However, such alignment also implies that income gains have been used primarily to sustain consumption rather than to build buffers.

Financial resilience depends on the existence of surplus income that can be saved or used to reduce liabilities. The available data do not indicate a significant widening of the gap between income and expenditure that would signal growing household savings. On the contrary, the close tracking of consumption to income implies that many households operate with minimal slack. In this context, resilience is fragile rather than robust.

The absence of publicly available household balance sheet data constitutes a major analytical constraint. Official publications do not provide regular, disaggregated information on household savings rates, debt levels, or debt service burdens. While aggregate credit data exist at the financial system level, they are not broken down in a way that allows assessment of household exposure to borrowing or reliance on credit to smooth consumption. This lack of transparency limits the ability to evaluate whether households cope with shocks through savings drawdown, increased borrowing, or deferred expenditure.

Labour Income Volatility and Shock Exposure

Labour income volatility further affects coping capacity. Employment stability varies across sectors, with workers in tourism, construction, retail, and informal services more exposed to cyclical shocks. During periods of disruption, such as the pandemic or global demand slowdowns, income losses can be abrupt while essential expenditures remain fixed. Without documented buffers, such households face immediate stress even when aggregate indicators later recover.

Public transfers and social protection measures mitigate some of these risks, particularly for pensioners and vulnerable groups. However, coverage is not universal across working-age households, and data on the adequacy of transfers relative to household needs are not systematically published. As a result, the extent to which public support offsets income volatility cannot be fully quantified within the available evidence base.

Another dimension of resilience is the capacity to defer or adjust expenditure. In Mauritius, the high share of essentials in household budgets limits this capacity. Food, housing-related costs, transport, and utilities cannot be postponed without significant welfare consequences. When income falls or prices rise, households have little choice but to compress discretionary spending, increase informal coping strategies, or rely on family networks. These mechanisms are largely invisible in official statistics.

The cumulative effect of these dynamics is a form of constrained stability. Households appear to maintain consumption over time, but this stability rests on narrow margins. Small shocks can have disproportionate effects, and recovery does not necessarily restore lost resilience. The persistence of cost-of-living concerns despite moderate inflation and income growth reflects this underlying vulnerability.

In summary, the balance between income and expenditure in Mauritius suggests neither widespread collapse nor comfortable security. Instead, it points to a system in which households remain solvent but exposed, absorbing pressure through adjustment rather than accumulation. This context provides the foundation for introducing a broader analytical framework that captures stress beyond inflation and income alone. The next subsection develops this framework through examination of what standard indicators fail to capture.

Household Stress in Practice: Four Family Profiles

To illustrate how macroeconomic trends translate into lived household reality, the following profiles document actual stress patterns across Mauritius' income distribution. These composite profiles are constructed from household budget survey data, employment statistics, and documented consumption patterns rather than individual anecdotes.

Section 31.5

What Inflation and Income Indicators Do Not Capture

Standard economic indicators provide an incomplete account of household well-being in Mauritius. Inflation rates, wage growth, and average income figures describe broad trends, but they do not fully reflect the pressures households experience in daily life. The persistence of cost-of-living anxiety despite moderate inflation and rising incomes indicates that important dimensions of stress lie outside conventional measurement frameworks.

The Expectations and Trust Dimension

Finally, expectations and trust play an indirect but powerful role. Households respond not only to current conditions but also to perceptions of future stability. Even modest price increases can generate anxiety if households lack confidence in income growth, employment security, or institutional support. Such expectations influence consumption and saving behaviour, yet they are not captured in traditional economic datasets.

Taken together, these omissions explain why standard indicators often understate household stress. Inflation may be moderate and incomes rising, but unmeasured vulnerabilities accumulate beneath the surface. Recognising these gaps is essential for a realistic assessment of household welfare. The following subsection consolidates the available evidence into a structured analytical framework, introducing a Household Stress Index designed to capture dimensions of pressure that conventional metrics overlook.

Section 31.6

The Household Stress Index (HSI): Conceptual Framework and Application

To bridge the gap between macroeconomic indicators and lived household experience, this section introduces a Household Stress Index as an analytical framework rather than a statistical claim. The index is designed to organise existing, verified data in a way that captures pressures not visible in headline inflation, wage growth, or average income measures. It does not replace official statistics; it complements them by reframing how household vulnerability is assessed.

The starting point of the Household Stress Index is the recognition that stress emerges from interaction effects. Households do not experience prices, incomes, employment, and access to buffers in isolation. Stress arises when these elements combine in ways that narrow margins of adjustment. In Mauritius, this interaction is shaped by structural features such as import dependence, high expenditure rigidity, uneven income distribution, and limited transparency on household balance sheets.

The Five-Pillar Framework

The index is structured around five pillars, each grounded in observable institutional data or, where data are missing, in clearly identified measurement gaps. The purpose is not to produce a single numerical score, but to map pressure points systematically and transparently.

Interpreting the Framework

When these five pillars are considered together, a clear pattern emerges. Mauritius exhibits a combination of moderate inflation, modest real income growth, high expenditure rigidity, strong external exposure, and limited visibility on household buffers. Individually, none of these factors implies crisis. Collectively, they generate persistent household stress.

The Household Stress Index therefore reframes the policy question. Rather than asking whether inflation is low or wages are rising, it asks whether households have sufficient room to absorb shocks without sacrificing essential consumption or future security. Under this lens, stability appears conditional rather than robust.

Importantly, the index is designed to be adaptable. As new data become available, particularly on household balance sheets or updated poverty metrics, the framework can be populated more fully. Its value lies in making explicit the dimensions of stress that are otherwise implicit or ignored.

This analytical framework provides a bridge between economic measurement and public perception. It explains why cost-of-living concerns remain salient despite favourable macro indicators and prepares the ground for subsequent sections on public sentiment, social trust, and economic behaviour. The final subsection consolidates the findings of this chapter and records the remaining measurement gaps for continuity in the overall outlook.

Section 31.6A

Building Household Resilience: What Good Looks Like

The preceding analysis documents household stress and structural vulnerabilities. This subsection shifts from diagnosis to prescription, identifying concrete enablers that could strengthen household resilience. These are not speculative recommendations but evidence-based interventions implemented successfully in comparable economies facing similar constraints.

Five Critical Enablers for Household Resilience

Interdependence and Implementation

These five enablers are mutually reinforcing rather than independent. Reducing essential price exposure increases resources available for savings (Enabler 1 → Enabler 3). Enhanced income stability makes savings accumulation feasible (Enabler 2 → Enabler 3). Managing external exposure reduces income volatility from import-dependent sectors (Enabler 4 → Enabler 2). Measurement transparency reveals which interventions work, allowing resource allocation to effective programs (Enabler 5 enables optimization of Enablers 1-4).

Implementation requires sustained political commitment rather than piecemeal reform. Half-measures typically fail—announcing matched savings program without adequate budget, implementing unemployment insurance with inadequate benefits, publishing some data while withholding sensitive metrics. Comprehensive approach addressing multiple enablers simultaneously generates compounding benefits that isolated interventions cannot achieve.

Quantified Opportunity Costs of Household Stress

The cost of inaction on household resilience is not merely humanitarian—it represents significant economic opportunity cost measurable in foregone growth, productivity, and welfare.

Stress Transmission Mechanisms: From External Shocks to Household Welfare

Understanding how external shocks flow through the economic system to household welfare reveals intervention points for resilience building. The following framework maps key transmission channels.

The transmission framework reveals why household resilience requires multi-level intervention. Addressing only one level (e.g., targeted subsidies at Level 2-3) provides partial relief but doesn't prevent future shocks from flowing through other channels. Comprehensive resilience requires interventions at multiple levels simultaneously: reducing external exposure (Level 1-2), buffering domestic price impacts (Level 2-3), strengthening household financial capacity (Level 3-4), and enabling measurement transparency across all levels to guide resource allocation.

Section 31.7

Measurement Gaps, Structural Limits, and Continuity Note

This section closes the analysis of cost of living and household stress by documenting, explicitly and systematically, what is not measured in Mauritius despite its importance for understanding household welfare. These gaps are not peripheral. They shape how economic conditions are perceived, debated, and addressed, and they condition the reliability of policy responses built on partial information.

First, there is no regularly published, up-to-date poverty headcount or poverty gap measure based on recent household surveys. The last fully comparable poverty statistics date back more than a decade. While preliminary results from the 2023 Household Budget Survey provide income and expenditure averages, they do not disclose official poverty outcomes. This omission prevents an objective assessment of how many households fall below minimum living standards or how poverty has evolved through the pandemic, inflation shocks, and subsequent recovery.

Second, household balance sheet data are largely absent from public reporting. There is no consolidated, regularly released dataset on household savings rates, debt levels, or debt service burdens. Without this information, it is impossible to determine whether households are maintaining consumption through sustainable income growth or through financial strain, such as borrowing, arrears, or asset depletion. The distinction is fundamental to evaluating resilience but remains empirically unobservable in official statistics.

Third, income volatility and underemployment are insufficiently captured. Unemployment rates are published, but they do not reflect irregular work, informal employment, multiple job holding, or income instability. Households relying on such income sources may experience stress that is invisible in headline labour indicators. The absence of systematic reporting on income variability limits understanding of how secure household earnings truly are.

Fourth, distributional impacts are weakly measured. National averages conceal significant variation across income groups, regions, household compositions, and gender. Lower-income households face higher exposure to essential price inflation, while higher-income households retain greater flexibility. Official statistics do not routinely disaggregate cost-of-living impacts in a way that reveals these differences, constraining targeted policy design.

Fifth, non-monetary dimensions of stress remain outside formal measurement. Adjustments such as reduced consumption quality, deferred healthcare, increased unpaid labour, or reliance on informal support networks do not register in price or income data. Yet these responses directly affect well-being and social cohesion. Their absence from measurement frameworks contributes to the gap between official indicators and public sentiment.

Continuity and Forward Linkages

Taken together, these gaps reinforce a central finding of this chapter. Household stress in Mauritius cannot be inferred reliably from inflation and income statistics alone. The available data suggest stability, but that stability is conditional on narrow margins and unobserved coping mechanisms. The lack of transparent, comprehensive household-level data increases uncertainty and weakens confidence in official narratives about affordability and welfare.

From a continuity perspective, this conclusion serves as a hinge point in the overall outlook. The conditions documented here feed directly into subsequent sections. Household stress shapes public sentiment, trust in institutions, media narratives, labour market behaviour, and entrepreneurial risk-taking. It also influences how citizens interpret macroeconomic performance and policy credibility.

When households operate close to their budget constraints with minimal buffers, even modest economic shocks—a temporary job loss, a medical expense, a vehicle repair—can trigger disproportionate stress. This fragility affects multiple dimensions: workers may accept unfavorable employment terms to maintain income security, entrepreneurs may avoid productive risks, families may defer investments in education or health, social cohesion may fray as competition for limited resources intensifies.

The household stress analysis therefore provides essential foundation for understanding broader economic and social dynamics in Mauritius 2025-2029. It establishes that beneath surface stability lie structural vulnerabilities that condition economic behavior, political attitudes, and institutional trust in ways that aggregate indicators cannot reveal.

Forward-Looking Household Stress Scenarios: 2025-2029

Projecting household stress trajectories forward requires considering multiple scenarios based on policy choices and external conditions. Three scenarios illustrate plausible pathways and their implications.