SA consumers alarmed by dramatic increases in food prices

South African consumers have been alarmed in recent weeks about a dramatic increase in food prices with many taking to social media to express their anger.

But according to the National Consumer Commission (NCC), no formal complaints were made about skyrocketing food prices.

On Wednesday, the Competition Commission said while inflation had come down overall, food inflation remained at nearly twice the inflation rate for all goods and services.

Food prices

This is because price drops haven’t consistently resulted in lower producer or retail prices or been delayed in doing so. It said producers and retailers face other cost pressures. As citizens took to social media to express their struggles and outrage, the NCC said South Africans only complained to themselves.

 “We have seen a report, but can’t make any conclusions or assumptions because we didn’t work on the report,” said the NCC’s Phetho Ntaba.

“From our side, we don’t have formal complaints of food prices so it will be really difficult for us to engage and have a view on that report.”

According to the Competition Commission, the latest edition of the Essential Food Pricing Monitoring Report highlights comparative trends in grocery retailer margins to global peers. It shares evidence of the “rockets and feathers” effects in maize meal, cooking oil and bread, and provides an in-depth overview of the beef value chain in SA.

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Monitoring

Competition Commission spokesperson Siyabulela Makunga said: “The commission is actively monitoring essential food prices and investigating the factors driving food inflation. “This ensures transparency regarding the profit margins set by producers and retailers of these products.

With upstream commodity prices declining in the first half of 2023, the commission is now focusing on how quickly this translates into lower prices for consumers.”

Makunga said the commission noted that competition authorities in Canada, Ireland and the UK recently published reports on the state of grocery retail competition in these countries in light of high food inflation.

“These reports assess trends in retail profits over the past three to four years. When comparing their findings with South Africa, we notice that local retailers are more profitable than their counterparts in these countries.

“Inflation and falling prices are not the same thing. An inflation rate measures the rate at which prices are increasing. So a falling food inflation rate does not mean food prices are falling. “It may do so, but it really means that on a year-on-year comparative basis, the rate of increase in food prices has slowed down,” Makunga said.

Inflation

However, chief economist at Econometrix Azar Jammine said despite the inflation rate easing to 4.7% – the lowest since August 2021 – it didn’t necessarily mean that food prices had fallen.

“The overall food inflation rate has come down from 14% to 10%, but that still means food prices are rising at a rate of 10% per annum,” he said.

“That is lower than 14%, but it’s still a substantial inflation rate. So a food inflation rate of 10% does not mean that food prices have fallen. It’s possible if you look at the last couple of months that certain food price items have fallen.

“But because we measure inflation on the basis of what happened a year ago compared with now, the fact that it’s come down from 14% to 10% might just be that prices have fallen in the last month or two, said Jammine.

“So compared with a year earlier, the rate of increase has slowed. But it needn’t be the case… It might just be that some of those prices have carried on rising – but more slowly than previously.”

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