Higher fuel and electricity costs, crumbling rail infrastructure, weaker rand will all add to higher costs. Picture: Danish Siddiqui, Reuters.
Higher fuel and electricity costs, crumbling rail infrastructure, weaker rand will all add to higher costs. Picture: Danish Siddiqui, Reuters.

Tough times ahead as food prices rise again

By Given Majola Time of article published Oct 29, 2021

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TIMES were tough and would continue to get tougher as food prices rose again this month, according to the October 2021 Household Affordability Index released by the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD).

The group’s researcher, Julie Smith, said this week that the average Household Food Basket increased by R98.08 (2.3 percent) month-on-month and R400.83 (10.2 percent) year-on-year.

“In October this year, the average Household Food Basket cost R4 317.56. The rise in food prices in October is in line with our predictions and were set to continue into 2022,” said Smith.

PMBEJD said that the massive electricity tariff hike of roughly 14.59 percent effected in June and July this year had to result in price hikes of goods and services down the line. It said these increases were now reflecting in higher food prices on supermarket shelves.

The group said October further typically saw higher vegetable prices (specifically potatoes, butternut, and tomatoes) due to seasonal changes as potatoes, for example have been harvested in the Free State and Limpopo (unfavourable weather conditions resulted in lower yields), and the next crop in KwaZulu-Natal to only be ready from December.

“We are also seeing some anomalies in food prices across areas, with a spike in maize meal prices in parts of Joburg and Cape Town (South Africa has a bumper maize crop this year), including higher milk, amasi and egg prices, higher poultry and meat prices, and bread prices in some areas.

PMBEJD says the massive electricity tariff hike of roughly 14.59 percent effected in June and July this year had to result in price hikes of goods and services down the line. Picture: David Ritchie/ANA

“Cape Town saw a surge in prices this month of R174.49 (4.2 percent) month-on-month. Cape Town prices have tended to be moderate over the past year, October has seen a shift which brings the total cost of the basket (R4 280.67) more in line with Joburg (R4 305.69) and Durban (R4 327.06) prices,” said Smith.

The rising food prices, which the group expected into next year would put severe pressure on households whose incomes remained low through low baseline wages and low-level social grants and whilst jobs remained elusive.

Monthly food expenses took up a large portion of income. Higher food prices, together with higher electricity prices and taxi fare hikes, were putting enormous pressure on the household purse and the family plate.

PMBEJD projections for the next several months, based on past data and current factors, suggested food prices would rise through to next year. The higher electricity tariffs, including the additional costs of sourcing back up supplies amid load shedding, load reduction and blackouts, would increase the cost of production, transport, and storage.

It said the forthcoming fuel price increases in November would run through the value chains making agricultural production and transport more expensive. The escalating crude oil price, which was predicted to continue its surge would not only increase fuel prices, but would increase the cost of many inputs into agriculture, processing, and packaging (crude oil is a core component in fertilisers and pesticides, plastics, and packaging). If the rand weakened, these costs would increase further, it said.

PMBEJD said South Africa’s railway system in many parts of the country was crumbling, and more of the goods and services were being transported by road, therefore, requiring fuel. Pressure on the highways would increase, adding longer travel times on the road (this adds to the cost of fuel and cold storage, amongst others). The heavier traffic and heavier cargo further resulted in a deterioration of road surfaces and would require more maintenance, again longer time on the road, including damage to vehicles.

PMBEJD said more incidences of civil unrest and disruptions of major highways and logistics in general must be a factor in the future, given the upcoming elections, the period thereafter, and the general desperation and frustration of so many of our people. It said another factor was that the country was moving into the festive season, where it said retailers typically hiked their prices.

In October 2021, all household food baskets increased. Cape Town, which has tended to be reasonably moderate over the past year, spiked in October by R174.49, or 4.2 percent, and now showed a similar year-on-year trend as all other areas.

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BUSINESS REPORT ONLINE

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