Food inflation remains at nearly twice the inflation rate for all goods and services in spite of overall inflation moderating, according to the latest edition of the Essential Food Pricing Monitoring (EFPM) Report released by the Competition Commission yesterday.
Commission spokesman Siyabulela Makunga said: “With upstream commodity prices declining in the first half of 2023, the Commission is now focussing on how quickly this translates into lower prices for consumers.
“However, this report indicates that these price drops haven’t consistently resulted in reduced producer or retail prices or have been delayed in doing so, noting that producers and retailers face other cost pressures.”
A key finding of the EFPM included that bread and wheat prices fell by approximately 10% during the first quarter of the year, but producer and retailer prices for bread both rose by 3% in this period, and only started to drop in the second quarter of the year.
On white maize prices had fallen consistently and by 23% since February, but producer and retail prices for maize meal had yet to decline.
Cooking oil prices were on a declining trend since a year ago. Last year the EFPM report indicated that producer prices were rising despite sunflower seed prices remaining stable in South Africa.
Makunga said, however, while retailers had cut their margins during the period of rising prices, they had been slower to reduce prices, resulting in expanding margins. More recently, sunflower seed prices had dropped, but producer prices had still not responded.
As noted in the previous EFPM Report, IQF (individual quick freezing) chicken price inflation remained lower than food inflation.
The Commission said it would continue to monitor this value chain following the re-imposition of anti-dumping tariffs.
This as some of the large food companies had recorded large revenue increases as a result of price increases rather than volume growth.
“Some producers have indicated that load shedding costs have not had a material impact on their businesses, except for poultry producers.”
This EFPM report also took a closer look at the South African beef sector. It found that it was becoming increasingly concentrated with more companies vertically integrating across several points of the value chain. In particular, the number of commercial cattle farmers has more than halved in the past 10 years.
The top 10 cattle feedlots accounted for almost 70% of cattle, up from 50% only six years ago; feedlots were increasingly integrated into abattoirs and the top 10 slaughtered close to 50% of cattle.
This year, weaner calve prices had declined substantially, resulting in lower prices for beef carcasses too. However, the retail price for beef cuts collectively has not declined this year, resulting in the retailer share reaching 40% of the shelf price, the highest share since January 2021, the report stated.
Meanwhile, the latest findings from NielsenIQ’s State of the Retail Nation analysis, also released yesterday for the second quarter of this year, based on its comprehensive Retail Measurement Service (RMS), showed that South Africa’s FMCG (fast moving consumer goods) sector had achieved R621 billion in annual sales this year, reflecting a 13.5% increase.
These results were against the backdrop of continued global inflation, which has reached record highs in the past two years. However, the analysis said despite South African Consumer Price Inflation (CPI) falling to 4.7% (June 2023), food inflation remained notably high, surpassing 10% for 12 consecutive months and currently sitting at 12%.