Avocados, oranges, tomatoes, chicken portions and cooking oil are some of the food items that have experienced volatile price increases in the past two years due to global inflationary pressures, as well as local disruptions and extreme weather events, the Competition Commission says in its latest Essential Food Pricing Monitoring report. .
The report tracked food price data until January 2022, before Russia launched its attack on Ukraine.
“South Africa experienced unrest and riots in July 2021, with supply chain disruptions, product shortages and impacts on the pricing of certain goods. Oil price swings, exchange rate volatility and severe weather conditions worldwide have also contributed to local food price inflation,” notes the report.
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Most price-volatile foods
According to the report, the wholesale price of tomatoes hit several peaks between March 2020 and January 2022, reaching over R16 per kilogram in April 2021, from just over R8 in March 2020.
“It has been reported that heavy rainfall in the main production regions affected tomato supplies, pushing prices up. The supply shock caused fresh produce markets across the country to receive significant gains. [fewer] tomatoes.”
In the fruit category, avocados and oranges would have registered the most price fluctuations, sometimes even higher than the expected seasonal peaks.
Wholesale avocado prices peaked at R35 per kg in January 2022, from just below R10 in March 2020.
The price of oranges rose to almost 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 by 58% over the past two years to R19 in January 2022, compared to R12 in January 2020.
The selling price for cooking oil increased by 41.8% over the same period, from R21.95 to R31.12.
At the peak of the pandemic, the price of fresh chicken portions peaked at R50 per kg, but later dropped to above R30 per kg in November 2021. Lamb peaked from above R150 in February 2021, but fell to above R100 in November 2021 .
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The poor bear the brunt
With food inflation reportedly rising above headline inflation, reaching its highest level in a decade, the commission’s report notes that poorer consumers — who typically spend a significant portion of their income on food — are most affected by rising food prices.
“Inflation in essential foods is hurting the poor as these goods represent more of their consumption and expenditure, leaving poorer consumers more affected by food price increases than wealthier consumers.”
Food inflation in the country has risen two percentage points above headline inflation since the start of the Covid-19 pandemic. Despite headline inflation falling to 5.7% in January 2022 from 5.9% in December 2021, food inflation rose further to 6.2% in January from 5.9% recorded in December 2021.
Overall inflation for decile 1 (poorer consumers) was higher than inflation for decile 10 (richer consumers), so the poor experience a higher level of inflation than the rich, the report notes.
“While that gap narrowed at the end of 2021, inflation for the poor has subsequently risen, while inflation has fallen for decile 10.”
In light of the precarious international environment – two years after the coronavirus pandemic and Russia’s ongoing attack on Ukraine – the committee notes in its report that while the price volatility of essential food items has largely been driven by local events, the global dynamics may still have an impact, especially with regard to introduced price inflation.
The committee says it will monitor this closely to ensure that there is no anti-competitive behavior in the essential food market.
“The committee is concerned about the inflation of imported prices, and it is critical that price increases for imported products are not unduly exploited by middlemen or processors – especially those who purchase scarcer commodities such as wheat – who may attempt to use cost increases to to justify price increases than justified.”
Listen: James Hodge, CompCom Chief Economist, Discusses Essential Food-Price Monitoring Report