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Inflation may have slowed slightly in April, but high food, fuel and transport prices continue to hit consumers hard.
A drop in the fuel price is expected in the coming months, but that does not normally cause the prices of other commodities, or fares, to drop. And one analyst predicts that companies will battle to provide salary increases this year due to difficult trading conditions. Some are likely to have to shut up shop, with many jobs lost.
Indicating how the man in the street has had to battle to come out financially are the statistics which show the prices of many common items have increased by between 100 and 200 percent in the past decade.
Finweek magazine recently published the price increases of a range of goods including basic foodstuffs over the last decade, from 2002 until now.
The price of petrol rose by 239 percent, a 2.5kg bag of Iwisa Maize Meal increased by 213 percent and the average rental for a three-bedroom house with a double garage and swimming pool in Newlands rose 98 percent.
Statistics SA released the latest consumer price index (CPI) for April yesterday. It showed a slight increase of 6.1 percent year-on-year in April, which was up from 6.0 percent in March.
On a month-on-month basis, inflation slowed to 0.4 percent, as expected, compared with 1.1 percent in March.
John Loos, a household and property sector strategist, said the lower income groups were still bearing the brunt of consumer price inflation because of food price inflation, which still runs high.
Loos said global food prices were a major cost category which remained the key risk to the lower income end of the market.
“However, perception of global economic softening has exerted some downward pressure on oil prices, and this looks set to cause domestic petrol price inflation to moderate once more after a resumed increase in April. The major positive contributor to CPI has been the weak residential rental market, and this looks set to continue to help contain overall CPI inflation to near 6 percent.
The DA said earlier this month that rapidly rising food prices were undermining people’s human right to be free from hunger.
Data from the party’s survey showed that 52 percent of households experience hunger, while a further 33 percent are at risk as a result of declining buying power.
“The cost of basic staples is rising even faster. The price of a 5kg bag of maize meal – a staple food for many SA families – rose by 63.88 percent between January last year and January this year,” said the party.
Research by the party and other organisations showed that one-third of households report running out of money to buy enough food and one out of five children say they are hungry because of this.
“A varied basket of healthy and nutritious foods consisting of carbohydrates, protein, fruit and dairy costs up to 100 percent more than in other developing countries,” the DA added.
Cliff Johnston, vice-chairman of the SA National Consumer Union, said high food prices were not encouraging news for the poor consumer, and the situation was likely to remain bad for at least the rest of the year.
“Basic food prices appear to have stabilised in the past month or so, but are sticking at their higher levels.
Fuel prices may well reduce somewhat in the coming months following global trends, but are unlikely to drop to levels before the recent spike thanks to increased levies and taxes imposed during the last budget.
Johnston added that businesses would be hard pressed to provide salary increases this year owing to poor market conditions, and labour demands may cause many to close their doors.
“Desperate consumers may turn to the unending spiral of credit and debt to make ends meet, which is a sure recipe for disaster.”
Consumer activist Ina Wilken said ongoing price hikes from fuel price increases to medical aid hikes, just made it impossible for the man in the street.
“People are becoming despondent and getting deeper into debt. They have no option but to try and get credit to pay for the most basic (items): food, housing, clothes and electricity.
“With high fuel prices all other commodities increase immediately. When fuel prices go down, no product or service prices ever go down,” Wilken said.
Melanie Jackson, the marketing manager for Catholic Welfare Development, said the organisation, like many other donor-funded NGOs in the country, had been hit hard by the 2008 economic crash and subsequent global recession.