Ba­sic food costs still way above inflation level

‘Prob­lem some­where in dis­tri­bu­tion’

Weekend Argus (Saturday Edition) - - NEWS - BIANCA CAPAZORIO

BA­SIC food items like milk, su­gar, eggs and veg­eta­bles are still show­ing high lev­els of inflation, while lux­ury items like hot bev­er­ages, in­clud­ing cof­fee and tea, have seen inflation soar to al­most four times the na­tional av­er­age.

Con­sumers also had to fork out ex­tra for elec­tric­ity last month fol­low­ing a huge price hike from Eskom. Elec­tric­ity inflation rose over 21 per­cent from June and over 27 per­cent year-on-year.

The Con­sumer Price In­dex fig­ures re­leased on Wed­nes­day in­di­cate that al­though inflation is edg­ing closer to the 3-6 per­cent ideal, the cost of liv­ing had still risen 6.7 per­cent year-on-year. Statis­tics South Africa says that on av­er­age, prices across the board in­creased 1.1 per­cent yearon-year.

The Stats SA data shows that even though the rate of inflation on veg­eta­bles dropped by 1.8 per­cent from June to July year-onyear, it was still high at 14 per­cent. Other ma­jor cul­prits were fish, and eggs and dairy (11.3 per­cent) and su­gar, sweets and desserts (12 per­cent).

And caf­feine ad­dicts won’t be sur­prised to find inflation on hot bev­er­ages was a whop­ping 26 per­cent year-on-year.

Oils and fats were the food price in­dex cham­pi­ons, the only food on the Stats SA list to show de­fla­tion (-9.2 per­cent year-onyear).

While the food price in­dex dropped 0.4 per­cent to 8.3 per­cent from the pre­vi­ous month, Na­tional Agri­cul­tural Mar­ket­ing Coun­cil econ­o­mist An­dre Jooste said it was im­por­tant to re­mem­ber that this did not nec­es­sar­ily in­di­cate food price drops.

“It’s im­por­tant to re­mem­ber that when we talk about inflation, we talk about the rate of in­crease of food prices, not about food prices ac­tu­ally com­ing down,” he said.

Trade union Sol­i­dar­ity this week de­cried the high cost of foods, with the cost of their ba­sic shop­ping bas­ket, made up of items like rice, mar­garine and bread, show­ing lit­tle de­cline in the past few months.

“Fol­low­ing the 16.8 per­cent food price in­crease last year, we still saw in­creases at the beginning of this year, de­spite the drop in in­put costs ex­pe­ri­enced in the fourth quar­ter of last year. Food prices should have dropped ear­lier this year, but su­per­mar­ket groups and food pro­duc­ers are abus­ing lower in­put costs to in­crease their prof­its,” said Sol­i­dar­ity spokesman Jaco Kleyn­hans.

“If we leave out all the prod­ucts in our bas­ket that are on spe­cial or are not avail­able, our bas­ket costs R175.73 at Check­ers. At Pick n Pay our bas­ket costs R181.43 and at Spar R197.22,” Kleyn­hans said.

“The re­al­ity is that most South Africans buy th­ese ba­sic food­stuffs and they are pay­ing record-high prices for th­ese prod­ucts. The con­sumer will have to protest more ef­fec­tively against this,” Kleyn­hans said.

SA Na­tional Con­sumer Union spokes­woman Ina Wilkin said that with food price inflation still higher than to­tal inflation fig­ures, con­sumers would con­tinue to feel the pinch.

“If you look at the ba­sics, like maize meal, milk, eggs and su­gar, the things every­one needs in their cup­boards, th­ese prices aren’t com­ing down and con­sumers still feel they are pay­ing far too much for food. The ba­sics are still a prob­lem” she said.

The Week­end Ar­gus, which runs its own shop­ping bas­ket, has seen a slight drop in prices over re­cent months. How­ever, prices again started tak­ing an up­ward turn in the past week.

While the su­per­mar­kets men­tioned in the Sol­i­dar­ity state­ment this week de­fended their prices in the press, Wilkin said that there was a prob­lem “some­where in the dis­tri­bu­tion chain”.

“The farmer is be­ing paid far too lit­tle for his pro­duce and the con­sumer is pay­ing far too much; some­where in the mid­dle, there is a prob­lem,” she said.

Ear­lier this year, the Com­pe­ti­tion Com­mis­sion launched an in­ves­ti­ga­tion into ma­jor su­per­mar­ket chains for pos­si­ble con­tra­ven­tion of the Com­pe­ti­tion Act.

Pick n Pay di­rec­tor for foods, Kevin Korb, said: “Pick n Pay’s in­ter­nal inflation re­mains be­low that of gen­eral food inflation and prices have in­deed dropped over the past few months, show­ing that the rate of inflation has slowed dra­mat­i­cally. A num­ber of out­side stud­ies and sur­veys have con­firmed that food inflation is in­deed fall­ing, the lat­est of which, printed in the Week­end Ar­gus, il­lus­trates the drop in price of a bas­ket of goods over the last 12 months.”

“At any time we have about 2 000 prod­ucts on spe­cial, at times be­low cost. We still sell a num­ber of ba­sics at cost. We mon­i­tor a bas­ket of 400 prod­ucts ev­ery month and this price check is in­de­pen­dently au­dited. With 20 000 prod­ucts on our shelves, prices also dif­fer de­pend­ing on what re­gion they’re in and whether they are on spe­cial or not.

“What is also good news is that this time last year, there were a num­ber of sup­plier in­creases pend­ing, but this month, there are far fewer, and at lower rates. This too should help sta­bilise food prices,” Korb said.

At­tempts to Con­tact Spar and Shoprite for com­ment were un­suc­cess­ful.

But Jooste said that when it came to food costs, the news was bit­ter sweet. “The sweet part of it is that the rate of the in­crease in prices has come down but the sour part of it is that we thought we would have seen some de­fla­tion by now.”

Jooste said that sta­ples like wheat prod­ucts had shown a year-on-year in­crease of less than 1 per­cent which was “very good news” and that inflation on sun­flower oil had also de­creased sig­nif­i­cantly. He said maize prod­ucts, on av­er­age in­creased 6.8 per­cent year-on-year, and veg­eta­bles were still a “prob­lem” with sig­nif­i­cant in­creases.

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