Economists predict it will be some time yet before South Africans see any significant change to their till slips even with a predicted petrol price cut for next month, the third in a recent series of cuts, writes Vivian Warby.
By Vivian Warby
IN A MIXED-bag month, consumers will probably see petrol prices come down, interest rates hike and not much change on their till slips as South Africa is plunged into Stage 6 load shedding.
Economists predict it will be some time yet before South Africans see any significant change to their till slips even with a predicted petrol price cut for next month, the third in a recent series of cuts.
South Africans have been hard hit by food prices that are quick to increase and slow to decline.
And, if these prices don’t come down soon there are likely to be increased instances of malnutrition, especially among children, because families just can’t afford to buy nutritious food, says Mervyn Abrahams, programme co-ordinator of Pietermaritzburg Economic Justice & Dignity Group (PMBEJD).
Economists say that with diesel estimated to increase by 45c, even if petrol costs are slashed, there won’t be any transport cost reprieve to the retailer with diesel-run trucks transporting goods.
Added to that, says John Loos, an FNB economist, retailers have a whole lot of costs along the supply chain – not only transport. Consider labour, electricity, rent, and rates and, since these costs are not coming down and in some cases rising, it is unlikely you will see lower food prices. And if they do decrease, it will most likely be in your fresh produce, he says.
“But we do score in some ways,” says Loos. Lower petrol price contributes to lower inflation which brings interest rates – which have been rising substantially and are likely to hit 10.25 % by year-end – nearer to peak.
Abrahams, whose group – PMBEJD – brings out a monthly Household Affordability Index, says “globally we have are seeing prices of commodities such as wheat, sunflower, corn and other kinds of oils coming down however locally we haven’t seen any food prices come down”.
“What we have seen – based on our index – is that even if the level of inflation on basket is getting smaller by month, it is still rising month-on-month”.
However it is not all pessimistic news and Abrahams believes that within the next few months we may see food prices come down – “and if not then I would seriously query where the hoarding of profits is happening”, he says, adding that the group would be closely watching profit margins of retail stores and dividends that they will be giving shareholders.
“From our point of view at a time of global hardship for most people, retailers shouldn’t be hoarding and increasing profits massively.”.
Abrahams is a stalwart in the social justice world with first-hand experience of seeing families go to bed hungry because they just can’t afford to put food on the table.
When asked what things were looking like on the ground this week, he said: “People are not surviving. They live off debt, cutting back on the number of meals they eat and buying the cheapest food available, which is not necessarily the most nutritious”.
“Some are growing a bit of veggies which is good and supplements their nutrition.”
With load shedding hitting Stage 6 on the weekend, consumers are in for a further tough time.
InfoQuest/TrendER, a local online research company interviewed respondents, nationally representative of the online population, 18 years and older, across all provinces in South Africa in its most recent survey and found:
* 60% of respondents had at least one of their home appliances damaged or destroyed because of load-shedding power surges, and one in two had lost the contents of their fridge at least once – adding to the woes of high grocery bills.
In addition to having to repair or replace household items, consumers are also having to fork out money to keep the power on in their homes.
* 17% had purchased a generator,
* 16% invested in solar power, and
* 14% bought an inverter.
* Just over 55% of respondents have bought a gas stove to ensure that basic cooking can still occur.
