Durban - Value Added Tax (VAT) and petrol price increases have left many South Africans reeling because of the impact on food costs.
While the main sufferers are the poorest the middle-class is also feeling the pinch. However, the prices of some foods have increased while others decreased.
Dr Christo Joubert, agro-food chains manager at the National Agricultural Marketing Council, said the reason for this was because food was seasonal.
“Food price inflation is anticipated to increase over the next few months emanating from the increased VAT rate, higher fuel prices (resulting in increased transport costs and fuel taxes), higher global oil prices and the exchange rate depreciation,” Joubert said.
Global food systems also played a role in South African prices.
“As a result of international disruptions, the oil price may be even higher, with the rand weakening further,” he said.
“Prospects for a significant drop in international oil prices are slim, but the rand will not appreciate significantly until next year’s election.
“The good news is that the government is looking at products which will be excluded from VAT,” Joubert said.
Dr Clif Johnston, vice-chair at the SA National Consumer Union, said they had made a recommendation to the National Treasury that foods such as red meat (offal), poultry (fresh and frozen), white bread (basic loaves), peanut butter, sorghum meal, macaroni, spaghetti, polonies and long-life milk, should be VAT free.
“The effect on food prices has, however, been patchy. Quite a lot of foods have actually decreased in price compared with a year ago, though perhaps by not as much as they might have done in the absence of the VAT and fuel price increases,” Johnston said.
“The prices of some products, however, have increased dramatically as suppliers take advantage of a ready excuse to raise them,” he continued.
Food prices before and after VAT and petrol price increases. Source: National Agricultural Marketing Council.
Predicting more food price increases in the coming months, Johnston said costs of beef and lamb would be exceptionally higher.
Maize though, was cheaper than a year ago.
“The effects of the fuel price increase take some time to filter through to the market, and the full impact is still to be felt. In addition, the more recent slump in the value of the rand is likely to exacerbate these pressures on prices. So consumers may be in for a difficult time ahead,” he said.
Evashnee Naidu, Black Sash manager in KZN, said the organisation’s initial reaction to the VAT increase was that despite certain zero-rated items, the impact would be hardest felt on the poor and social grants recipients.
“Social grants barely provide for the basic necessities and these additional increases in the cost of living further erode the benefits of the social grant.
“Taxi fares have gone up during the last few weeks due to the petrol price increase, while salaries and social grants have not or cannot adjust to these increases which puts a further burden on poor and middle income households.
“Many beneficiaries have to make tough choices about what they can and cannot afford,” Naidu said.
She said a survey should be conducted of nutritional food items that young children, the elderly and the infirm need to lead a healthy lifestyle.
Households
It should be looked at in relation to what households consume monthly, and a balance should be struck on ensuring that these items are VAT free.
In April, the Pietermaritzburg Agency for Community Social Action (Pacsa) said hiking VAT had deepened the affordability crisis and that it would have a considerable negative impact on low-income households.
Duduzile Radebe, Pacsa acting director, said: “We see food prices on the increase and this is as a result of increasing petrol prices in June and July, which means that there is an increase in the affordability crisis, against a backdrop of a 26.7% unemployment rate (according to Statistics SA for 2018, quarter 1).
“In this respect, a short-term outlook relating to the reduction of prices is unlikely, unless there are changes made in monetary policy particularly as this relates to those who fall within the low-income bracket and unemployed people.”