Regulator’s warning on price of food essentials
The prices of some essential foods are slowly stabilising, albeit from a high base, but the Competition Commission still believes essential foods are becoming unaffordable, posing a threat to food security.
Over the past three years, consumers have been under severe pressure from rising prices because of a number of factors, such as load-shedding, the high cost of raw materials and transport expenses.
This week the commission published its latest report on essential food prices, looking at sunflower oil, brown bread, eggs, chicken and maize meal. The commission has been monitoring the prices of essential foods since the start of the Covid-19 pandemic in March 2020.
In its latest report, it warned that, while lower food inflation may be a positive sign, food prices are still rising at a rate that may be a threat to food security.
Pressures stemming from load-shedding and transport costs haven’t abated, and the impact of drought conditions is likely to worsen the situation throughout the value chain.
Food inflation reached 5.1% in March 2024, the lowest since September 2020. This low food-inflation figure comes after a period of food inflation being significantly higher than overall inflation, leading to immense pressure on household budgets, the commission said.
Mervyn Abrahams from Pietermaritzburg Economic Justice and Dignity, a group that tracks food prices, said while the costs of some food items were stabilising, that was off a high base. Some items had consistently been coming down in price, but others were “staying at quite a high level”.
Maize, cooking oil, onions and samp have become cheaper while the prices of rice, sugar, flour and eggs “remain stubbornly high, [and are] even increasing”.
“Our basket of food is R5,336,31 [per month], which is an increase of about 6.2% over the past year, and when you look at levels of income to determine levels of affordability, you see that food prices are still very high.”
Though prices are stabilising, it “does not mean that food prices have become affordable”.
“We are still in an affordability crisis environment ... most low-income households will not be able to afford sufficient and nutritious food, even though prices are beginning to stabilise,” said Abrahams.
“So our hope is therefore that we see prices come down significantly over the next part of the year, because that will actually make for more affordable food, or that levels of income will increase [in the course of] the year.”
Consumers are increasingly swapping items in their basket for cheaper alternatives. The commission’s report found that they were swapping chicken for canned pilchards. This trend is likely to continue and remain an important feature of grocery shopping in the coming months, according to commission economist Kagiso Zwane.
Zwane said canned fish might be growing in popularity because it was sold in a range of quantities (typically 400g cans and smaller), which gave consumers some flexibility in their purchasing patterns. Canned products were also easy to store, as they did not need refrigeration. Another benefit was that pilchards were available in various flavours and could therefore accommodate different taste preferences without consumers having to spend more money on flavour-enhancing ingredients.
While the price of canned pilchards had increased, “our analysis shows that canned pilchards producers have absorbed some of the cost increases that they have experienced”, Zwane said. “This is likely to have benefited consumers as they increase their consumption of pilchards [in preference to] other protein sources.”
Food producers are providing cheaper versions of some of their premium products to retain hard-pressed customers.
Abrahams expects some vegetable prices to decline “to some extent, and that will be good, but then we must watch out for the drought in the eastern part of the country that could scupper maize prices”.