South Africans are consuming less bread across all income groups.
This is according to Tiger Brands, who own Albany Bakeries in the country.
The largest food product manufacturer on the continent, Tiger Brands, said yesterday that profit margins had been slashed in the six months to March 31 as cost-saving initiatives were not in time, or enough, to counter unprecedented input prices from the global supply chain squeeze.
Commodities such as wheat have also been facing supply disruptions caused by the Russian war.
The company predicted more pain for consumers as it said food prices could also rise sharply in the next few months.
This sentiment was laid bare after the price of producing goods rose to a record nine-year high in April on rising fuel and food prices.
Data from Statistics South Africa (Stats SA) yesterday showed that the producer price inflation (PPI) rose by 13.1 percent in April compared to the same month a year ago.
The PPI accelerated from an 11.9 percent increase in March, and was above market expectations of 12.3 percent.
This PPI print marks the fifth straight month of double-digit producer inflation and the highest reading since records began in 2013.
Stats SA said producer prices increased mainly due to the soaring prices of fuels, food and metals, machinery and equipment.
Rapid rise in food products
Prices for raw food materials, for example, such as wheat and maize had increased between 20-40 percent in the six months.
According to Tiger Brands, consumers in the highest LSM group have been abandoning bread the most, followed by shoppers at the lower end of the income scale.
Bread consumption among the mid-income group, which is also declining, is seeing minute decreases.
Tiger Brands further stated that while there were slight market gains for white bread in the Albany brand, it saw accelerated market share declines in its brown bread.
Yokesh Maharaj, chief growth officer for Tiger Brands said, “The bread category in totality, we did see over the last three years is muted growth with a deceleration of at least 5% in the last fiscal, across multiple LSM levels.”
SA Reserve Bank also warns of high prices
South Africa’s central bank said on Wednesday the risk of a spillover of the Russia-Ukraine war could hurt the country’s financial stability through rising food and fuel inflation, lower economic growth and high unemployment.
Emerging markets have been unduly impacted by the Russia-Ukraine crisis through increases in the price of oil, gas, wheat and other grains, forcing central banks to tighten monetary policy even at the risk of undermining economic growth.
South Africa’s central bank last week increased its prime lending rate by 50 basis points to 4.75%, its highest increase in six years, to rein in inflation.
In its biannual health check of the financial system, the South African Reserve Bank (SARB) said that while the financial system of Africa’s most advanced economy was “resilient”, stagflation fears could exacerbate inequality and slow growth.