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Food prices soar above inflation rate

Already cash-strapped and struggling to put food on their tables, consumers have been facing food price increases significantly higher than the rate of inflation. The latest Food Price Monitor report has revealed the costs of even the most basic foods have increased by up to 56 percent in just one year.

From April 2011 to April 2012, the price of basic food items like milk, bread, margarine, rice, maize meal and meat rocketed and, according to economists and consumer experts, it is the poorest South Africans who are most affected.

Desperate times call for desperate measures and, unless consumers put their pride in their pockets and go back to basics, they will not keep up with the continuously rising cost of daily living, consumer experts warn. File photo: Siphiwe Sibeko. Credit: SATURDAY STAR

Urban consumers paid R8.23 for a 700g loaf of brown bread and R9.19 for a loaf of 700g white bread during April 2012 – increases of 12.74 percent and 11.66 percent respectively, compared with the same time last year. The price of 5kg of special maize meal leapt by 56.01 percent.

However, despite being worse off than their urban counterparts, rural consumers paid even more, with statistics showing that the same basket of food cost them R14.89 more.

Analysing the Food Price Monitor, consumer activist Ina Wilken expressed concern that the 30 percent of the population who were not able to afford even the most basic food items were the ones hardest hit.

“If you look at the cost of the food basket expressed as a share of the average monthly income of (this portion of the population), it increased from 34.1 percent in April 2011 to 38.7 percent in April 2012. But we should not be misled by this percentage change. If you look at the individual items, it is rather concerning that the most basic commodities are far above the inflation rate.”

Breaking down the statistics for both rural and urban customers, Wilken found that individual price increases for rural consumers, although mostly less than urban consumers, were not relative to the difference in the incomes of both groups. In the case of 750ml Sunflower Oil, rural consumers were paying R1.17 more, while urban consumers only 21 cents more. The case was the same with 2.5kg white sugar, where rural consumers were paying R2.70 more and urban consumers R1.98 more.

Wilken said significant price inflation of 10 percent or more – experienced for important products such as maize meal, bread, cabbage, tomatoes, chicken, milk and margarine – would have a negative impact on household food security..

Furthermore, according to the report, Wilken said it was “interesting to note” that some retailers’ basic products decreased by 1.51 percent, while others increased by 9.77 percent for the same products.

“Likewise, the cheapest white sliced bread at one retailer increased by 7.75 percent and at another by 27.11 percent. This is an indication that consumers must shop around and make sure they get value for their money.”

Wilken said the impact of inflation on poor consumers was plainly evident, and that it was “extremely clear” that the products that they were dependent had skyrocketed.

“The question may well be asked: was this due to weather factors, imports, or excessive increases due to the fact that it is well known what the majority of people are buying? These are basic products that everyone needs to satisfy basic needs. Surely, due to the high turnover specifically on these products, consumers should get them cheaper?”

She said it was also interesting that the demand for maize had, in the past four months, declined by almost 50 000 tons a month. The impact on meat consumption was significantly larger, with reports from butchers and retailers indicating that demand for meat had declined sharply.

“It is clear that consumers are under increasing pressure with higher administered prices, especially fuel and electricity. The implication of higher energy costs will mostly be felt by processed food items. Over the past two years, consumer spending has been supported by above-inflation wage increases and an almost record low interest rate. However, personal debt levels are high and unemployment is rife.”

Local economist Bonke Dumisa said many South Africans were spending less than they needed to on food, as they were trying to pay for so many other necessities. He suggested people with tight budgets consider moving away from premier branded foods to cut costs.

Some price increases:

As the cost of living continued to rise an increasing number of South Africans were taking out unsecured loans in an attempt to make ends meet, said Rajeen Devpruth, statistics manager at the National Credit Regulator.

“It is just about survival,” he added explaining that between October and November 2011, South Africans took out unsecured or non-mortgage loans totalling R26bn.

The top uses for the money were for consumption purposes like food, building supplies and to consolidate loans, said Devpruth.

While it was easier to get an unsecured loan, the maximum interest rate could be as high as 32 percent. – The Mercury

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