Standard Bank has published a report on consumer spending behaviours and trends, revealing how vulnerable South Africa’s poorest households are to the rising cost of food.
According to Standard Bank, food price inflation is expected to hit an average of 10.2% in 2016, peaking at 12% – however, economists are more pessimistic, expecting food inflation to peak at 16.%%
Food prices in the country have been adversely affected by the weakening economy and weakened rand – on top of uncontrollable conditions such as the drought in the country which continues to affect farmers.
Already in 2016, the average food basket price has increased by 10%, according to Stats SA, with items such as fruit and vegetables rising 18% in the past 12 months.
Meat prices – especially beef products – have also ballooned, as farmers feel the continued effects of the drought.
Add to the mix accusation of price fixing in certain staple products such as bread, and all things point to massive price pain for consumers.
According to Standard Bank, around 62.3% of South African households are low-income earners, living on less than R86,000 per year.
But of all household groups across the country, it’s the low-income households who spend the most on food – up to one third of their available income – exposing the group to high levels of food inflation.
Of the R627 billion spent on food, beverages and tobacco in 2015, R285 billion (45%) came from the poorest group, showing just how many households are struggling.
Recent data from Africa Check confirmed that approximately 7 million people in South Africa go hungry each day, and that as many as 14 million have difficulty accessing food.
With rand weakness a given reality for the country for some time to come, and inflation data up in the air – with some economists saying it could hit higher than 8% by year-end – worse may be still to come for consumers.
Stat SA reported that consumer inflation retreated marginally to 6.2% in April, down from 6.3% in March. The rate is still above the South African Reserve Bank’s target of 6.0%.