Pricey pork makes it costly to bring home the bacon
WHILE consumers are grappling with the one-percentage point increase in VAT, they are paying more for pork products despite the drastic drop in price.
From April 1, VAT increased from 14% to 15%.
Christo Joubert, of the National Agricultural Marketing Council (NAMC), said it was too early to determine the impact of the VAT hike on consumers at this stage. However, there could be a difference in spending patterns with some consumers moving from one product to another.
Joubert said the market was feeling the effect of the listeriosis outbreak and although farmers had been hit by a fall in protein prices, at the retail level this had still not been passed on to consumers. Pork prices had started to come down but not as significantly as was expected, he added.
“These issues are concerning and hopefully a resolution will be found soon,” Joubert said.
The NAMC monitors food prices at retail level and, based on 28 selected items, it releases reports on food price trends.
According to its latest report, food inflation decelerated to 3.9% during February, which compared with 4.5% reported in January, as a result of a decline in agricultural commodity prices.
However, egg prices remained high as a result of the avian flu outbreak.
In February, the cost of 28 items in the NAMC food basket, including maize meal, baked and dried beans, chicken, cabbage, apples, eggs, tinned fish and fresh milk, cost R870 compared with R874 in January.
However, some items such as Ceylon tea, eggs, fresh mince, chicken portions and cabbage exceeded the inflation band of 6%.
An economist at the University of Stellenbosch Business School (USB), Professor André Roux, said VAT was relatively low in South Africa compared with most countries and consumers, in real terms, would be paying up to 0.8% more for some products as a result of the increase.
“What we don’t know is whether or not sellers would raise their products by this percentage or more,” he added.
Roux said from about the end of 2016 and the beginning of last year, food inflation was about 12% due to the severe national drought but the figure had come down drastically to about 4.5% by the beginning of this year.
He said the outlook for food inflation was expected to continue to ease in the coming months, if there were no drastic natural disasters, an outbreak of bird flu and indirect influences such as a change in oil prices and exchange rates.
Other issues that could affect food prices were labour and fertiliser costs, Roux added.