South Africans are short on money to buy food each month

The latest Household Affordability Index by the Pietermaritzburg Economic Justice & Dignity group (PMBEJD) shows a continued rise in food items in August in South Africa – meaning less money in the pockets for consumers.

This has led to families underspending on food by a minimum of 46.8%, it said.

The August 2022 Household Affordability Index, which tracks food price data across the country, showed that the average cost of the household food Basket is R4,775.59 – up R26.72 (0.6%), from R4,748.87 in July 2022.

Year-on-year, the average basket increased by R534.47 (12.6%) to R4,775.59 in August 2022.

Data from SatsSA on Wednesday (25 August) pointed to an acceleration in South Africa’s annual inflation rate accelerated to 7.80% in July 2022, from 7.40% in the previous month and above market expectations of 7.70%.

The main contributors to the spike in inflation include higher costs for transport (increased by 25% vs 20%); food and non-alcoholic beverages (9.70% vs 8.60%); housing and utilities (4% vs 5.10%) as well as miscellaneous goods and services (3.60% vs 4%), noted Adriaan Pask, CIO at PSG Wealth.

Annualised core inflation, which excludes food, non-alcoholic beverages, fuel, and energy prices, also surpassed expectations, rising to a new record high of 4.60% in July 2022, from 4.40% in the previous month.

On a monthly basis, consumer prices rose by 1.50%, following a 1.10% increase in June and above market expectations of a 1.40% rise.

Koketso Mano, senior economist at FNB, said that the data likely marks the monthly peak in headline inflation as fuel price pressures have moderated since July. At the start of August, petrol prices were cut by over R1.30 per litre and with 22 days into the month, the over-recovery is sitting north of R2 per litre, indicating another sizeable cut in September.

“A deceleration in fuel inflation is despite Brent crude oil prices remaining volatile, and the currency oscillating around R17 to the dollar. Nevertheless, headline inflation is expected to remain elevated for the remainder of the year, driven by food inflation.

“In addition, there is a risk that developing drought conditions in Europe and China could present upward pressure on global food and energy prices, as hydroelectric supply takes a hit,” said Mano.

“We remain concerned about second-round effects from elevated food and fuel inflation, which could be exacerbated by import price pressures as the rand has weakened against the dollar. These core price pressures, along with the continued normalisation in services inflation, should support the rise in core inflation, the economist said.

FNB said its preliminary projection is for headline inflation to average 6.9% in 2022.

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Living costs

The PMBEJD noted that the national minimum wage is R23.19 an hour and R185.52 for an 8-hour day. In August 2022, with 22-working days, the maximum national minimum wage for a general worker is R4,081.44.

The August 2022 cost of a basic nutritional food basket for a family of four persons is R3,212.97, it said.

In July, municipalities increased the price of prepaid electricity, on average by 7.47%. In Pietermaritzburg, 350kWh of prepaid electricity increased by R56, from R731.50 to R787.50 (from R2.09/kWh to R2.25/kWh). However, indications are that annual prepaid electricity tariff increases, for many families, across the country, have risen well beyond the 7.47%.

August has also seen taxi fare increases across the country. Fare prices have increased from R2-R3 and even by as much as R5 per local trip. In Pietermaritzburg, local fares increased by R2, with a one-way short trip now costing an average of R18 (up R2 from the previous R16).

This is a 12.5% increase.

“On our calculations, using Pietermaritzburg-based figures for electricity and transport, and the average figure for a minimum nutritional basket of food for a family of four – in August this is R3 212,97 – puts electricity (the 7.47% increase on paper) and transport (the 12.5% increase), now taking up 58.1% of a worker’s wage (R2,371.50/R4,081.44).”

Food is bought after monies for transport and electricity have been paid for or set aside, and so in August 2022, PMBEJD calculates that workers’ families will underspend on food by a minimum of 46.8% – having a maximum of R1,709.94 left after transport and electricity, and with food costing R3,212.97.

In August 2022, the average cost to feed a child a basic nutritious diet was R820.26. Year on year, that cost has increased by R72.96 or 9.8%.

In August 2022, the PMBEJD said that the child support grant of R480 is 23% below the food poverty line of R624, and 41% below the average cost of R820.26 to feed a child a basic nutritious diet.

The cost of the foods prioritised and bought first in the household food basket is important, said the PMBEJD. “The core foods are bought first and these foods ensure that families do not go hungry whilst ensuring that meals can be cooked.

“When the prices of core foods increase, there is less money to secure other important mostly nutritionally-rich foods, which are essential for health and well-being and strong immune systems,” it said.

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