SA data worth volatility in important meals, hurting the poor

Avocados, oranges, tomatoes, hen parts and cooking oil are a number of the meals gadgets which have seen unstable worth will increase during the last two years on account of world inflationary pressures in addition to native disruptions and excessive climate occasions, says the Competition Commission in its newest Essential Food Pricing Monitoring report.

The report tracked meals worth information up till January 2022, earlier than Russia launched its assault on Ukraine.

“South Africa suffered unrest and riots in July 2021, with disruptions to supply chains, product shortages and impacts on pricing of certain goods. Fluctuations in the oil price, volatility in the exchange rate, and severe weather events globally have also contributed to local food price inflation,” the report notes.

Read: CompCom launches contemporary produce investigation with one eye on meals inflation

Most worth unstable meals gadgets

According to the report, the wholesale worth of tomatoes noticed a number of spikes between March 2020 and January 2022, rising as excessive as greater than R16 per kilogram in April 2021 from simply over R8 in March 2020.

“It is reported that heavy rains in major producing regions impacted tomato supply, causing increases in prices. The supply shock resulted in fresh produce markets around the country receiving significantly [fewer] tomatoes.”

In the fruit class, avocados and oranges are stated to have registered probably the most worth fluctuations – at instances larger than the anticipated seasonal spikes.

Wholesale costs for avocados peaked at R35 per kg in January 2022 from slightly below R10 in March 2020.

The worth of oranges rose to almost R15 in January 2022, rising from simply above R5 on the onset of the pandemic.

The wholesale worth of a 750ml bottle of cooking oil elevated by 58% within the final two years, rising to R19 in January 2022, up from R12 in January 2020.

The retail worth for cooking oil noticed a 41.8% spike in the identical interval, rising to R31.12 from R21.95.

At the peak of the pandemic, the value of contemporary hen parts peaked at R50 per kg, however later dropped to above R30 per kg in November 2021. Lamb peaked at above R150 in February 2021 however dropped to above R100 in November 2021.


The poor bear the brunt

With meals inflation reportedly rallying above headline inflation and even reaching its highest degree in a decade, the fee’s report notes that poorer customers – who sometimes spend a good portion of their earnings on meals – are those most affected by the rising meals costs.

“Inflation in essential foods hurts the poor as these goods account for more of their consumption and expenditure, which leaves poorer consumers more affected by food price rises than richer consumers.”

Since the beginning of the Covid-19 pandemic, the nation’s meals inflation has been rallying two share factors above headline inflation. Further, regardless of headline inflation dipping to five.7% in January 2022 from 5.9% in December 2021, meals inflation elevated to six.2% in January from the 5.9% recorded in December 2021.

“Overall inflation for decile 1 (poorer consumers) has been higher than inflation for decile 10 (richer consumers), so the poor experience a higher level of inflation than the rich,” the report notes.

“Whilst that difference narrowed at the end of 2021, inflation for the poor has subsequently increased, while inflation for decile 10 has come down.”

In gentle of the precarious worldwide setting – two years into the coronavirus pandemic and the continued assault on Ukraine by Russia – the fee in its report notes that though worth volatility of important meals merchandise has been largely pushed by native occasions, world dynamics may nonetheless have an effect, particularly almost about imported worth inflation.

The fee says it’s going to preserve a detailed eye on this to make sure that there isn’t any anticompetitive behaviour within the important meals market.

“The commission is concerned about imported price inflation, and it is key that increases in prices for imported products are not exploited unduly by intermediaries or processors – especially those sourcing scarcer products like wheat – who may attempt to use cost increases to justify greater price increases than warranted.”

Listen: CompCom chief economist James Hodge discusses the Essential Food-Price Monitoring report

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