There is some hope for South African consumers struggling to cope with spiralling food prices, according to the South African Reserve Bank (SARB).
”There are signs… that food price inflation is moderating somewhat,” it says in its Quarterly Bulletin, released on Thursday.
The prices of locally produced goods increased by 21,8% in the first quarter of this year, compared to the annualised rate of 11,1% in the last quarter of 2001, the report says.
”The rapid food price increases were the prominent factor behind this acceleration,” reads the report.
The prices of imported goods quadrupled from an annualised rate of 11,5% in the fourth quarter of 2001 to 43,4% in the first quarter of this year. This means that imported year-on-year inflation amounted to 17,4% in April 2002, compared to 7,4% five months earlier, the SARB says.
The growth in real final consumption expenditure by households waned from a seasonally adjusted and annualised rate of 3,5% in the fourth quarter of 2001 to just over three percent in the first quarter of 2002. This was mainly due to lower expenditure on durable goods, especially new cars.
A growth of 11% in expenditure on semi-durable goods, especially clothing and footwear, was recorded in the first quarter of this year.
”Households were enticed to increase their real spending on clothing, footwear and household goods by retailers who actually lowered prices in an effort to attract customers.”
There was a better demand for goods and services by households in the first quarter than initially expected, the report says.
”This can mainly be attributed to a relatively strong increase in the real disposable income of households, which was boosted by an increase in the income of farmers and higher dividend receipts from the corporate sector.”
Tax relief also played a positive role.
”Despite their willingness to spend, consumers refrained from using debt excessively,” read the report.
Consequently, the ratio of household debt to disposable income declined from 55% to 54% from one quarter to the next. In the first quarter of 2002 the purchasing pattern of households moved away from items sensitive to interest rate changes.
The growth in real final consumption expenditure by government remained roughly stable at three percent.
The country’s real gross fixed capital outlay grew by six percent in the first quarter of 2002, compared to 5,5%in the preceding quarter, the report says.
”The growth in real fixed capital formation by private business enterprises continued robustly at a seasonally adjusted and annualised rate of almost nine percent in the first quarter of 2002, following an increase of six percent in the fourth quarter of 2001.”
Measured over four quarters, the nominal factor income increased by 10% in the first quarter of 2002, broadly similar to the preceding three-month period.
”This was the net result of steady growth in the total compensation of employees and slightly faster growth in the gross operating surplus of business enterprises.”
Gross saving as a percentage of the gross domestic product increased from 15,5% in last year’s final quarter to 16% in this year’s first.
Higher corporate saving more than neutralised a sharp decrease in government saving, the report says. The report notes that gross saving by households remained weak.
The domestic economy continued to grow at a fairly sturdy pace — by two percent — in the first three months of 2002, although somewhat slower than in the last quarter of last year.
However, the real value added from January to March this year was still about two percent higher than in the same period last year.
”The domestic economy apparently was more robust in the first quarter of 2002 than generally expected, given the uncertainties emanating from the steep fall in the exchange value of the rand and the unsettled situation in Zimbabwe prior to the election held in that country in March 2002.
”Activity in South Africa was probably supported by the recovery in the global economy, the bright prospects for exporters and a pick-up in the demand for goods produced by import-competing industries.”
The report says export earnings rose strongly in the first quarter of 2002 as the global economy recovered and domestic producers expanded their sales into export markets. Imports remained lively too.
”More capital goods were imported, reflecting the high level of investment activity in the economy.”
The result was a balance of R4,2-billion on the current account, the report says. – Sapa