The drought which has been plaguing the country for several months will not only affect the poor but everyone on a fixed income, Amanda Fitschen, an Economics lecturer from Unisa, said on Thursday.
“The price increases will affect everybody, not just the poor. Everyone on a fixed income (that includes the aged who have retired and live on a pension) will see their real income fall,” Fitschen said.
However, because the bulk of income of the poorer people is spent on food, the food price hike predicted by economists is likely to have a more severe impact on the pockets of the poor, she said.
“Rising prices will cause everyone in the economy to change their spending habits, which means the true effect of price increases will be vast or universal. A household, for example, may employ someone as a domestic worker and because of rising prices be forced to reduce the number of days that the worker is in their employ in order to afford to feed the household,” Fischen explained.
Deputy Executive Director for AgriSA, Johan Pienaar provided an overview on how the drought would have an impact on the food prices which will affect the poor and the economy.
“Statistics SA released general inflation rates comparing food prices from November 2014 and November 2015. It only increased by 4.8 percent which sounds acceptable within the range of the Reserve Bank. Generally speaking, food prices did not increase that much,” Pienaar explained.
He did however stipulate that bread and cereals were the food categories, which were generally consumed mostly by the poor, had increased by 7,3 percent.
Fish increased by 7 percent, oils and fats by 11,3 percent, while sugar had increased by 8,7 percent in that period.
“Various element and individual items in the food basket increased by far more than the general food inflation. The food consumed by the poor segment of the population had increased at a far higher rate than the general increase in food prices,” Pienaar added.
This food hike, according to Pienaar, would have a negative impact on poorer households, as cereal production would be seriously depressed because of the drought affecting the economy, the poor and farmers.
“Meat prices are also most likely to increase in the second half of the year, together with a possibility of a meat shortage,” he said.
The impact of the drought on the food price of fresh produce and goods has also affected Susan Sefiti, an informal trader from Atteridgeville who sells bananas and apples to put food on the table. The mother of four said times were tough financially for her because of the increased food prices, buying clothes for her children, school uniforms and other household expenses.
Her husband, who is currently not in good health, is not able to work so he cannot support the family together with his wife, she added.
“I am battling to survive now because everything is expensive. My kids also wanted clothes in December and now I have to buy them food, which is expensive, and school uniforms. It is very difficult because I work alone, my husband is not well right now,” Sefiti said.
She concluded by saying that she had failed to budget her finances and that should the situation worsen, she would struggle to take her children to school.
Antoinette van der Merwe, a lecture in Environmental Economics at Unisa, said the poor and those who do not own any assets besides their money paid a higher percentage of their wage or income on food compared to higher income earners.
“A poorer person spends all the money they earn on buying food and have nothing left thereafter, meanwhile a person who earns more will pay for their expenses and still have more than enough money left to spend on food, while the poor do not have anything left,” Van der Merwe explained.
She encouraged Pretorians to budget according to what they can afford and spend only on the important items.
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