Lifestyle

South Africans waking up to higher prices: index

Staff Writer

 ·19 Jan 2023

The pricing pressure on South African households is not letting up, with the price of food items in the country remaining stubbornly high despite headline inflation dropping slightly in December.

The latest South African Breakfast Index – derived from the latest CPI data published by Stats SA – shows that it costs locals 11.5% more to fry up a traditional farmhouse breakfast compared to a year ago.

The South African Breakfast Index is an index tracking the month-to-month prices of ingredients used to make breakfast in the country. The basket of items needed to make breakfast now totals R401.07 in December 2022, up 11.5% from R359.56 in December 2021.

The index is an adaptation of similar indices created abroad. Used by Hard Assets Investor (HAI) in the US and Bloomberg in the UK, it is a price indicator that measures inflation in wholesale food prices.

The prices used in the South African index come from Consumer Price Inflation (CPI) numbers tracked by Statistics South Africa. The reason breakfast is chosen is that it is a common meal that many households in the country would make and is reflective of the real impact of price inflation on daily life.

Stats SA published the latest CPI data for December 2022 on Wednesday (18 December), showing a slight drop in inflation to 7.2% from 7.4% recorded in November.

As has been the case for much of 2022, CPI is being driven by rising food prices and still-high fuel prices, with the former only decreasing slightly to 12.4% from 13.0% in November.

According to Stats SA, bread and cereal products have had the most significant impact on overall food inflation, with the annual rate reaching 20.6% in December. This is markedly higher than the low of 1.5% recorded in January 2022. In fact, December’s reading is the highest since February 2009 (23.8%).

Maize meal prices rose by 33.7% in the 12 months to December, with a monthly increase of 1.9%. The index for rice increased by 1.3% between November and December, taking its annual rate to 7.8%.

Meat inflation slowed to 9.7% in December from 10.5% in November. Oils and fats inflation cooled for the fourth consecutive month, declining to 22.4% in December.

Breakfast Index

It’s within the food inflation basket that the Breakfast Index is rooted.

The basket includes ten items:

• Milk
• Coffee
• Sugar
• Eggs
• Bacon
• Sausage
• Mushrooms
• Tomato
• Margarine
• Bread

Looking at the latest CPI data for December 2022, the overall cost to make breakfast (for however many people the basket could conceivably feed) is R401.07, up 0.3% month-on-month from R399.84 in November 2022.

Year on year, the basket is up 11.5% from R359.56 in December 2021.

The biggest price increases can be seen in instant coffee, which is up 21.6% from a year ago, with bread and tomatoes also seeing a significant jump of 18% to 19%.

The smallest hikes are seen in eggs, which are only up 4.8%. In fact eggs, margarine and mushrooms are the only items in the basket that are within the targetted inflation range – under 6%

Month on month, the changes are less pronounced, but nevertheless, the basket saw some significant changes.

Notably, Margarine was the biggest climber, with prices up 5%.

The table below outlines the price changes in the basket.

Read: Inflation eases in South Africa – but we’re not out of the woods yet