Food prices high despite lower input costs, says competition watchdog

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PIXABAY

The Competition Commission has revealed that while input costs of essential food items have declined, their retail prices remain unjustifiably high.

In its latest Essential Food Price Monitoring (EFPM) report, the Competition Commission said whilst there were indications of several positive signs of easing cost pressures, “there are still several risks that may emerge in the coming months that could potentially push prices higher for some important foods”.

It said the purported main contributors to the increase in input costs have all eased: the rand is stronger, there has not been load shedding in over six months, and fuel costs have come down significantly.

But despite this, the retail prices of sunflower oil, brown bread, canned pilchards, and individually quick frozen (IQF) chicken were all on the rise.

Some of the competition watchdog’s finding include: 

• Despite lower farmgate prices for wheat, the producer price of brown bread increased over the period under review for this report.

• A steep decline in the average producer price of cooking oil has not translated into lower average retail prices for this essential food product. As a result, the producer-to-retail spread for cooking oil is now above the levels seen immediately before the onset of the war in Ukraine.
• The effects of the avian flu outbreak continue to be felt by consumers. The producer and retail prices for eggs remain considerably above pre-avian flu outbreak levels. However, retailers have not fully passed on the higher producer prices. This is likely because producers and not retailers carried the brunt cost of containing the outbreaks as well as any associated financial losses.

The South African Federation of Trade Union (SAFTU) said it “strongly condemned retailers that keep essential food items' prices high despite declining input costs.”

“The working class is under siege – its living standards are assailed from all directions. At the point of production, the working class is assailed through precarious and insecure working conditions on pitiful wages, while as consumers, it is at the mercy of giant retailers whose lust for profits knows no bounds,” SAFTU said in a statement.

“Moreover, in addition to low wages and high retail prices on essential food items, there is a generalised attack on the social wage through the government’s budget cuts administered by the National treasury. 

 “The working class has only one option: to organise itself against the coordinated, systematic, and determined attacks of the capitalist class and the state that serves it.”

The Commission said it remained concerned about the high levels of food prices and would continue to monitor food prices “so that consumers are not harmed by unjustifiable increases”.