SA’s Vital Food Price Volatility Hurts the Poor – The Citizen

Avocados, oranges, tomatoes, chicken portions and cooking oil are some of the food items that have seen volatile price increases over the past two years due to global inflationary pressures, as well as local outages and extreme weather events, says the Commission for competition in its latest report on monitoring the prices of essential foods.

The report tracked data on food prices up to January 2022, before Russia launched its attack on Ukraine.

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

According to the report, the wholesale price of tomatoes recorded several peaks between March 2020 and January 2022, rising to more than R16 per kilogram in April 2021 from just over R8 in March 2020.

“Heavy rains in major producing regions were reported to have impacted the supply of tomatoes, causing price increases. The supply shock led fresh produce markets across the country to receive significantly [fewer] tomatoes.”

In the fruit category, avocados and oranges are said to have experienced most of the price fluctuations, sometimes exceeding the expected seasonal peaks.

Wholesale avocado prices peaked at R35 per kg in January 2022 from just under R10 in March 2020.

The price of oranges rose to nearly R15 in January 2022, rising from just above R5 at the start of the pandemic.

The wholesale price of a 750ml bottle of cooking oil has increased 58% over the past two years, rising to R19 in January 2022, compared to R12 in January 2020.

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The retail price of cooking oil recorded an increase of 41.8% over the same period, rising to R31.12 from R21.95.

At the height of the pandemic, serving price of fresh chicken peaked at R50 per kg, but subsequently dropped above R30 per kg in November 2021. Lamb peaked at over R150 in February 2021. but it dropped above R100 in November 2021.

With food inflation allegedly rising above nominal inflation and even reaching its highest level in a decade, the Commission’s report notes that the poorest consumers – who typically spend a significant portion of their income on food – are those most affected by rising food prices.

“Inflation in essential foods harms the poor as these commodities account for a larger portion of their consumption and expenditure, which leaves poorer consumers more affected by rising food prices than richer consumers.”

Since the onset of the Covid-19 pandemic, the country’s food inflation has risen two percentage points above nominal inflation. Furthermore, despite overall inflation falling to 5.7% in January 2022 from 5.9% in December 2021, food inflation increased to 6.2% in January from 5.9% in December 2021.

“Headline inflation for decile 1 (poorest consumers) was higher than inflation for decile 10 (wealthiest consumers), so the poor experience a higher level of inflation than the rich,” notes the report.

“While that gap narrowed at the end of 2021, inflation for the poor subsequently increased, while inflation per decile 10 fell.”

In light of the precarious international context – two years after the start of the coronavirus pandemic and Russia’s ongoing attack on Ukraine – the Commission notes in its report that, although the volatility of essential food prices has been largely driven by local events, global dynamics may still have an impact, especially with regards to import price inflation.

The commission says it will keep an eye on this to ensure that there is no anti-competitive behavior in the essential food market.

“The commission is concerned about import price inflation and it is imperative that price increases for imported products are not unduly exploited by intermediaries or processors, especially those sourcing more scarce products such as wheat, which they might try to use cost increases to justify higher price increases than warranted. “