‘Luxuries are gone. We are cutting basics’
South Africans are drowning in a tsunami of price hikes — and it’s likely to get worse.
A surge in the cost of petrol, food, property rates and utilities has been worsened by the recent truck riots, floods in the Western Cape and taxi and municipal worker strikes in Cape Town and Tshwane. An outbreak of avian flu is also likely to reduce the supply of chicken and eggs, pushing up prices further.
“All luxuries are gone. We are no longer cutting luxuries, we’re cutting basics,” said Juliet Hallam, 58, who lives in Johannesburg’s affluent suburb of Bryanston. “We are now just hanging on by our fingertips.”
She trawls through community newspapers for specials. She can’t afford to buy goods like cheese and often opts for “cheap shampoo” or none at all.
Hallam is among a growing number of middle-class South Africans battling to feed their families.
This week the cost of 95-octane petrol goes up by about 83c a litre, with diesel increasing by an expected R1.65/l.
The Bureau of Economic Research at Stellenbosch University has predicted the cost of living will get worse before prices stabilise some time next year.
Hugo Pienaar, chief economist at the bureau, said next week’s petrol price hike will increase food prices.
“With oil prices going up quite sharply, the big petrol price hike in September and another one in October, we are going to see a reacceleration of inflation in the short term,” Pienaar said.
He expects a “notable” GDP slowdown in the third quarter, which ended on Friday, largely due to disruptions such as the truck riots, floods along the west coast
and taxi and municipal worker strikes in Cape Town and Tshwane.
Basic foods have become unaffordable for many. The price of potatoes has soared by 198% from last year. Agricultural economist John van der Merwe said prices surpassed R100 for 10kg in the past week.
Van der Merwe said bananas are up 117% from last year. “The type of products is also significant. With interest rates higher this year, we are seeing the [wealthier] consumer being hit hardest with consumable spending.”
The September 2023 household affordability index, released by the Pietermaritzburg Economic Justice and Dignity Group on Wednesday, showed that prices of rice, butternut, green peppers, bananas, oranges and peanut butter increased 5% or more this month.
Hallam has already started a vegetable garden with tomatoes, onions and peppers in a bid to be more self-reliant.
“My electricity bill, which was roughly R1,000 a month, has gone up another R1,000 in a good month. All of these increases have completely wiped out our R3,000 grocery budget,” Hallam said.
Hallam’s family of three have seen their property’s municipal value, which determines the monthly property rates, rise from R1.4m to R2.5m, raising their municipal rates from about R1,000 a month to R2,100, further straining their finances.
Tracking food prices from 47 supermarkets and 32 butcheries, the Pietermaritzburg Economic Justice and Dignity Group found the average cost of their household food basket is R5,155,77. Six months ago it was R5,023.95. A year ago it was R4,805.86, so it’s increased 7.3% in a year.
Ncumisa Ndelu, who launched the “One Family, One Stockpile” group on Facebook several years ago, told the Sunday Times South Africans were not coping.
“The cost of food is an ongoing concern. Even when items are on sale, they are expensive. I just got the shock of my life buying eggs and onions. Even combo specials that used to help have gone up. The saddest part is that even the basics have gone up, forcing us to make hard choices.
“I have changed my meat choices. I am leaning to other protein sources such as pilchards and beans. I am sticking to basics. Right now, consumers need to prioritise more than ever.”
Dr Sifiso Ntombela, an agricultural economist and adviser to the minister of agriculture, land reform & rural development, said South Africa was hit by disruptions in the global economy, including the RussiaUkraine conflict and the fertiliser supply crisis. He said though the country was experiencing high food prices now, they would start to moderate then go down.
“With South Africa expecting large crops of maize and other grain products and improvements in terms of vegetable production, we might start seeing food prices cooling off,” Ntombela said.
He said poultry products such as eggs and chicken were expected to remain high because of avian flu outbreaks in the country.
“There might even be an increase in the price of poultry meat and eggs but if you’re looking at other commodities such as grains, they might start cooling off,” Ntombela said.
Agricultural economist Wandile Sihlobo, who is monitoring the avian flu crisis, said the situation is “already serious, particularly in Gauteng and Mpumalanga”. The costs will start being felt in the coming days, with recovery expected to take “some months”.
“There will be what we refer to as an upside risk to food inflation, but the extent of it remains unclear,” Sihlobo told the Sunday Times, adding that it was premature to worry about egg and chicken shortages.
Figures released by Stats SA show annual producer price inflation increased from 2.7% in July to 4.3% in August, while the producer price index (PPI) rose by 1% month on month in August. This was higher than the 3.7% forecast by Nedbank and Absa and indicates further price increases are looming.
BankservAfrica data shows nominal average take-home pay fell below the rising cost of living in 2022.
Added to this, all metros with the exception of Buffalo City this year hiked property rates by between 2% and 7.9%, while all the metros imposed double-digit increases for electricity ranging between 14.9% and 18.4%.
Cape Town and eThekwini led in terms of electricity hikes at 17.6% and 18.4% respectively. Tshwane electricity price increases were 15.1% and Joburg’s 14.9%.
Piling on the pain, this week three major medical aid providers announced higher than inflation increases for 2024. Discovery Health’s monthly fees will increase by about 7.5%, Bonitas will increase contributions by an average of 9% and Momentum’s average increases will be 9.6%.
Schooling has also been affected. TPN Credit Bureau, which helps 1,070 public and private schools to collect fees and minimise bad debt, said private schools were seeing a decline in admissions as parents opted for state schools “due to household financial pressure”.
The Federation of Governing Bodies of South African Schools (Fedsas) confirmed that its 2,000 member schools were owed R8bn in fees at the end of last year. The Association of Public Boys’ Schools of South Africa (APBSA), representing 37 schools, warned that there was a real threat of some schools retrenching “small numbers” of governing body-appointed staff next year because of lower fee collections.
Psychologist Dr Lerato Mokgethi said many of her patients were facing retrenchment.
“I think people are overcommitted when it comes to their financial obligations. The burden that there won’t be a holiday or Christmas clothes is there and this is generally felt by the middle class. When you look at the hierarchy of needs, the issues are often the basics shelter and food. Interest rates on bonds have increased and so have food prices.”
She has noticed that people are having to downgrade their lifestyles.
“A lot of companies are retrenching, which is already putting people who were in dire situations into added anxiety and depression. Chances are that at the end of the year they won’t have jobs.”
Cheryl Chanderpal, from Chatsworth in Durban, is now eating two meals a day. “I cut back on everything, and it’s become cheaper to simply buy a quick lunch than buy groceries and use electricity at home.”
Janri Liebenberg is shocked at the price of cheese. “We are a two-income home. I get mini panic attacks when I think of the rest of the country.”
Cape Town-based Zelda Lategan’s family no longer eats meat. “We gave up eggs. I bake most of our own bread and we buy grains and beans in bulk.”