Global Courant 2023-05-31 20:00:26
The Household Affordability Index for May from the Pietermaritzburg Economic Justice & Dignity group (PMBEJD) shows that food prices in the country remain high, but meat prices are beginning to turn.
For May 2023, the average cost of the household food basket was R5,071.59 – an increase of 0.9% from April’s R5,023.95, marking the first time the basket has ever exceeded R5,000 went.
However, year-on-year (YoY) the average cost of the basket increased by R461.70 (10.0%). This is a decrease from the 10.6% increase recorded in April.
The May 2023 food basket surge was still ahead of the latest inflation figures released by Stats SA, which said annual consumer inflation hit 6.8% in April.
That said, it was still much lower than annual inflation of 13.9% for food and non-alcoholic beverages in April, which fell from a 14-year high of 14.0% in March.
However, as per Stats SA data, there were still some increases in food prices when comparing March and April, with the price index for bread and cereals rising by 20.8% in the 12 months to April, compared to the state of March of 20.3%.
In addition, the milk, eggs & cheese product group saw an annual increase of 14.5% – the highest in 14 years (since January 2009).
According to the PMBEJD, the basket consists of 44 core foods commonly purchased by lower-income households, which make up the majority of households in the country.
In the May basket, only six items showed a price drop between May 2022 and May 2023, with cooking oil seeing the biggest drop at 16%.
37 other items in the basket saw a price increase, with beef seeing no YoY price change.
Meat prices in South Africa are expected to fall in the coming months, and the latest data from the Bureau for Food and Agricultural Policy (BFAP) also shows that price pressures on meat are starting to ease.
The BFAP noted that beef carcass prices have fallen by about 8% since January and by May 2023 were more than 10% below May 2022 levels.
“Prices are expected to fall further in the next 3 months – mid-May to mid-July – due to seasonal influences, in combination with additional meat available on the market. This trend of lower prices will mainly affect cheaper parts in the northern parts of the country, where about 40% of consumption is located,” the company said.
However, Roelie van Reenen, supply chain executive at Beefmaster Group, warned that price pressure is likely to last longer due to other factors at play.
“Consumers have less and less money to spend. With financial budgets under pressure, they are making significant compromises in their shopping choices due to financial constraints. This has implications for agriculture and beef value chains,” he said, adding that beef prices have fallen, but the price cut has not yet reached consumers.
Van Reenen noted that growers are operating under extremely difficult conditions and the situation is likely to remain challenging for the rest of the year.
“The fact is that we need to tighten our belts and brace ourselves for a prolonged period of challenging conditions,” he said. “I expect at least six to eight months of tough times ahead. However, we must remain optimistic and focus on producing cheaper, smarter and more market-oriented products to protect our industry.”
The executive noted that herds have declined and export markets have disappeared due to inadequate protection against diseases such as FMD, leading to an oversupply of beef in the local market.
The energy crisis has further complicated the task of aligning production with affordability and consumer demand.
Eight items in the PMBEJD index saw annual increases of more than 20%:
Onions: +84% Green pepper: +37% Spinach+ +27% Cornmeal: +26% Carrots: +24% Bouillon cubes: +22% Potatoes: +21% Tomatoes: +20%
On a MoM basis, food baskets in Cape Town and Maritzburg are declining. However, in Joburg, Durban, Maritzburg and Mtubatuba the basketed amount of MoM increases.
The Joburg basket rose by R 43.80 (0.9%) MoM, and rose by R 438.36 (9.5%) YoY, to R 5,064.87 The Durban basket rose by R 159.92 (3 .3%) MoM, and increased by R330.99 (7.0%) YoY to R5,040.59 The Cape Town basket decreased by R64.85 (-1.3%) MoM, and increased by R580, 48 (14.9%) YoY, to R5,025.00 The Springbok basket increased by R153.95 (2.9%) MoM, and increased by R564.10 (11.4%) YoY, to R5 .491.46 ,941.98 The Mtubatuba Basket was up R93.92 (1.8%) MoM, and was up R546.41 (11.6%) YoY, to R5,237.73
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