Cosatu has joined the call by Pick n Pay for South African food suppliers to drop prices in line with the dramatic drop in the local fuel price.

But Pick n Pay's fellow market leader, Shoprite, has warned consumers that cheaper fuel may affect prices only minimally.

Speaking to the Cape Argus yesterday, a Shoprite spokeswoman said: "Earlier this month the country's largest food manufacturers responded to Shoprite's enquiry (saying) that the lowering of their prices is unlikely due to the under-recovery of their input prices over the past year.

"With distribution costs being but a small component of suppliers' input costs, a lower fuel price would, at best, result in smaller price increases.

"Bread suppliers have indicated that there could be a drop in the bread price towards the end of the first quarter of 2009.

"The price of sunflower oil and wheat has come down, which will mean that the manufacturers' raw ingredient component of the price of certain food products will be lower."

But Shoprite also warned that retailers' hands might be tied due to a lack of alternative suppliers to choose from in the small domestic market.

"Due to the lack of competition in the local manufacturing industry, retailers are unfortunately faced with a situation where suppliers could refuse to deliver unless price increases are accepted," she said.

Cosatu's call came after Pick n Pay head Nick Badminton described possible food in-creases - despite the recent drop in the fuel price - as "un-tenable".

Yesterday he called on suppliers to be circumspect about increasing prices at a time when consumers were battling and warned that any proposed price increases would require detailed explanations before Pick n Pay accepted them.

Late yesterday, Cosatu expressed support for Badminton's plan to meet its biggest suppliers to find ways of reducing prices for consumers.

"Food producers last year claimed that fuel was a major component of their costs, so that the rising cost of fuel at that time forced them to put prices up," Cosatu spokesman Patrick Craven said.

"The price of maize rose 25 percent in the year to last February, while fresh milk climbed 21 percent, cooking oil 22 percent and cheese 35 percent. Margarine rose 18 percent, bread 11 percent, fruit and vegetables 18 percent and red meat 14 percent."

But now that this major component of their costs had tumbled by more than 60 percent since September, food manufacturers had not cut their prices proportionately, said Craven.

Cosatu endorsed the view of analyst Chris Gilmour when he said: "If the oil price affected food prices on the way up, it should have an equal but opposite effect on the way down.

"They (the manufacturers) can't have their cake and eat it."

In line with Shoprite's plea that retailers' hands may be tied, Cosatu repeated its call for the government and the Competition Commission to speed up their investigations into whether there is any price-fixing at any level in the food chain - by farmers, wholesalers or retailers.

"We have already seen evidence of price fixing in the bread and dairy sectors and demand firm action to prosecute any more food producers who are colluding to keep prices high," said Craven.