Basic food costs still way above inflation level
‘Problem somewhere in distribution’
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.