/ 30 March 2023

Rising food prices in South Africa: A struggle for daily survival

Yola Minnaar spends most hours of her day thinking about whether people in her neighbourhood have had something to eat. (Delwyn Verasamy/M&G)

Yola Minnaar spends most hours of her day thinking about whether people in her neighbourhood have had something to eat. 

When the pandemic hit, Minnaar rolled up her sleeves and went about feeding people from her home at the edge of Vrededorp in Johannesburg. At the time, many thought they were living through the worst but, in hindsight, there was still plenty more pain on the horizon. 

“It’s not better,” Minnaar says, sitting at the small dining table in her lounge. “It’s actually worse than what it was before. I mean, people can’t cope anymore.”

Data released last week showed that, despite inflation having peaked last July, in February food prices rose to their highest level since April 2009 — suggesting that consumers are still at the pointy end of the cost-of-living crisis

According to economists, food inflation is approaching its peak, as global food commodity prices start to ease. Until then, consumers will continue to feel the pinch, as they navigate grocery store shelves.

Minnaar says she was shocked by the price of bread. “Normally you just give the money and say, ‘Go buy.’ But when I went myself to go buy a loaf of bread, the guy told me it’s R20. I was like, ‘Yoh, what happened to the prices?’ It used to be R5 a loaf,” she recounts.

“It’s difficult. It is really bad. I mean, a litre of milk. How much do you pay? Almost R20 for a litre of milk. Our basic needs for the day are our bread, our milk, our sugar. We’re not even talking about butter … I love my butter. I love my sugar. What must you do? You need to use it sparingly, because you can’t even afford to shop like you used to shop.”

Minnaar describes the dilemma high food prices create for the old people, some of whom live in the nearby retirement home which overlooks the local cemetery. They receive a R1 980 older persons grant each month.

“They have to buy electricity. They have to pay for transport to the clinics. There is no clinic in my area. How much is the medication? she asked. “If you add up all that. Then there is food. How much is the food? What is R1 980 for them? It’s nothing. We would say, that’s peanuts.

“They have to survive. How do they survive in this area? … What has our country become? Look at the economy. How do they survive?”

Minnaar isn’t wrong about food prices being far worse than they were in previous years. 

In February, annual consumer inflation unexpectedly rose for the first time in four months, edging to 7% from 6.9%. The bump in inflation was driven by food price inflation.

According to Statistics South Africa, food and beverage price inflation accelerated to 13.6% year-on-year in February — the highest reading in 14 years. The data shows that over the past year, the price index for onions had risen 44%. The price indices of maize meal and samp increased 34.7% and 29.8% respectively.

Yola Minnaar. (Delwyn Verasamy/M&G)

Data collected by the Pietermaritzburg Economic Justice & Dignity group helps create a longer-term picture of how food prices have changed.

The most recent edition of the group’s household affordability index, released on Wednesday, shows that between March 2019 and March 2023, the average cost of the household food basket increased 60% from R3 108.77 to R4 966.20. 

Over that four-year period, the price of a 10kg package of frozen chicken increased 22% (from R325.49 to R397.24), a 10kg bag of rice increased 64% (from R79.49 to R130.42), five litres of cooking oil increased more than 120% (from R79.16 to R174.68) and a 10kg bag of onions increased more than 146% (from R48.95 to R120.74).

Meanwhile, household incomes have come under increasing pressure. There was an 8.3% year-on-year decline in the average real take-home salary in February 2023, according to clearing house BankservAfrica

This comes as the country has struggled to claw back the jobs lost during the pandemic. There are still 449 000 fewer employed people than there were during the first three months of 2020, according to Statistics South Africa’s quarterly labour force survey.

Signalling that some relief may be on the horizon, economists see food price inflation easing during the second half of the year.

Earlier this week, the Bureau for Economic Research (BER) noted that high input costs associated with load-shedding and the earlier sharp rise in feed costs, fertilisers and fuel should keep food prices elevated in the near-term.

Beyond the next several months, however, the food price outlook is more favourable, the BER said.

(John McCann/M&G)

Annual food price inflation accelerated sharply in the second half of 2022. The BER said these strong base effects should support an easing in the rate of food price rises in the past six months of 2023. Moreover South Africa’s maize and wheat futures have declined significantly from their highs in 2022.

“Should futures prices stabilise at these levels, or preferably decline further, it would go some way to ease the input cost burden for certain categories of food producers. If sustained, the lower oil price is another positive for food bills later in the year.”

But the BER still sees consumer food prices averaging about 9.5% in 2023, unchanged from the increase in 2022.

Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa, has an even more optimistic outlook, forecasting that annual consumer food price inflation should average about 7% in 2023.

He said South Africa’s food price inflation may stay quite elevated for the next couple of months before starting to cool in about May or June. This is as still high food commodity prices start to tail off. Although costs related to more severe load-shedding will continue to underpin prices in the coming months, interventions such as the diesel rebate for food producers should start to pay off in either May or June, he noted.

Earlier this week, the Competition Commission expressed its concern over possibly unjustified and opportunistic increases in food prices. 

Sihlobo explained that the recent volatility in domestic food prices is the result of a number of shocks to the global food supply chain. 

The droughts in Brazil and Argentina, for example, severely hit soybean harvests in those countries, causing prices to soar. A disruption of that magnitude, Sihlobo said, is enough to change the entire vegetable oil market. Then there is the fact that China has hugely increased its grain reserves and that Russia’s war on Ukraine caused exports from the leading grain producer to drop dramatically.

Sihlobo said that prices are not going to go back to their 2019 levels as long as uncertainty about the Russia-Ukraine war continues to shake the food market. He noted that South Africa has seen much milder food price hikes than in other parts of the world. 

Asked whether there ought to be other interventions to bring prices down quicker, Sihlobo said that ordinarily regulators should only step in when there is bad behaviour in the market. “We can explain what is driving prices and we have a credible way of anticipating when they will cool off. There has been pain to households, but that pain is temporary.”

For Kabelo Molepo, this pain couldn’t subside soon enough. He has watched his small business, Daddy Bae’s Kitchen, which he started during the Covid lockdown, crumble under the weight of hefty prices. He has had to stop baking and selling the chocolate chip cookies the business became known for. 

Kabelo Molepo. (Delwyn Verasamy/M&G)

“Last year, everything started to go downhill,” Molepo says. “Before that, I could restock with between R3 000 and R5 000. That has gone up to almost R7 000 for a complete restock. The chocolate chips that I used to buy have gone up by, like, R800. Flour has gone up … sugar has gone up.”

He says the pandemic was tough on people but at least food was affordable. “I’m hoping at some point it just gets better.

“I left my job to follow my dream. And, for a while, it was good. For a while everything was falling into place. Everything was going according to plan. Literally as soon as ingredients got more expensive, we had to kind of just pause everything. And yeah, I hope it gets better.”