From the editor
few of us who have shopped for food recently would be surprised at the latest inflation data, which showed food prices increased sharply by 9.8% year-on-year (y/y) in March – if anything, the number seems too low. At one supermarket in rural Eastern Cape, for example, the retail price for 25kg of special maize meal has jumped from R119.50 three months ago to R177 – an increase of nearly 50%. Higher-quality super maize meal now retails at R240 for 25kg. Keeping in mind that 53% of South Africans over the age of 15 live on less than R1 399 a month, according to the 2014 Living Standards Measures (LSM), maize meal must be getting unaffordable for an increasing number of South Africans who rely on it as their staple food.
Academics Saliem Fakir and Nan Tian recently explained in an article published by Daily Maverick that the poorest decile group is spending between five and nine times more of their total expenditure on food than the richest group, and almost three times more than the national average. Food price increases therefore affect the poorest income group substantially more than the average or richest group.
There is also a difference in food prices for the urban and rural poor, as food prices are higher in rural areas, the two academics pointed out. The overall consumer inflation numbers for March show the highest year-onyear price increases were seen in Limpopo and the Eastern Cape, two of the country’s poorest provinces.
Kevin Lings, chief economist at Stanlib, warns that food inflation will continue to increase over the coming months, reflecting partly the impact of the weaker rand (compared with its 2015 levels), and the current drought. Stanlib expects food inflation to end 2016 at around 14% y/y, which will help push overall consumer inflation up to around 8% by year-end.
Fakir and Tian recommend targeted government interventions to relieve the effects of food inflation on the poor. Social grants help, but they won’t solve the problem in the long term. That would require addressing market failure in rural areas, where there is often limited competition in the retail sector, and fixing land reform, though access to land and water alone do not a farmer make, they say.
So for the foreseeable future, South African households will spend an increasing share of their income to buy the same volume of food – and those are the lucky ones.