\nAnalysis using data from the 1995 and 2000 Income and Expenditure Surveys has found a significant increase in income inequality over the period and, further, that this increase in inequality eroded any significant poverty-reduction gains from higher economic growth. Secondly, the study aims to identify the drivers of the reproduction of inequality in post-apartheid South Africa. Throughout the time period wage inequality has been the main contributor to the growing income inequality. While we found that social transfers have little effect on income inequality when we decomposed the various sources of income, when grant income is excluded as a source of income from total income we find that it is an extremely important supportive source of income and without it many households would experience negative income growth.\n