REINSTATING the R1.50 of the General Fuel Levy, when the conditions which called for its introduction in the first place have not improved, will deepen the household affordability crisis, says the Pietermaritzburg Economic Justice & Dignity Group (PMBEJD).
The group released its May 2022 Household Affordability Index and Key Data which tracks food price data from 44 supermarkets and 30 butcheries, in Johannesburg (Soweto, Alexandra, Tembisa and Hillbrow), Durban (KwaMashu, Umlazi, Isipingo, Durban CBD and Mtubatuba), Cape Town (Khayelitsha, Gugulethu, Philippi, Langa, Delft and Dunoon), Pietermaritzburg and Springbok (in the Northern Cape).
The data showed that in May this year, the average cost of the Household Food Basket was R4 609,89.
On a month-on-month basis, the average cost of the Household Food Basket increased by R66.96 (1.5 percent) from R4 542.93 in April this year. Year-on-year, the average cost of the Household Food Basket increased by R472.78 (11.4 percent), from R4 137.11 in May 2021 to R4 609,89 in May 2022.
PMBEJD Programme Co-ordinator Mervyn Abrahams said that all the factors driving food prices upwards continued. He said that much higher commodity prices, production and logistical costs would continue to drive prices upward and were likely to continue rising for the rest of this year.
“Long supply lines make us vulnerable to food insecurity at both global and local levels. Covid-19 and now the Russia/Ukraine conflict (pandemics and geopolitical tensions – both potential features of our future), including local climatic disasters (recent flooding in KZN) and social unrest (July 2021 and general daily protests) which disrupt logistics and production, suggest that we need to seriously rethink our levels of exposure to global commodity price movements and speculation, and/in the long food supply chains, which impact negatively on household food security. Our over-exposure to global supply lines suggest that we need to build national capacity and reserves as an immediate and long-term mitigation strategy, including to invest more in local agricultural input capacity, and small-scale farmers to produce food closer to the table where it is consumed. Ensuring household food security is a primary function of government,” Abrahams said.
PMBEJD said there was a direct correlation between household food security and societal stability and with the increasing household food insecurity, the risk of social instability had increased significantly.
The group’s data showed that food baskets increased in all areas tracked, except Springbok.
The Johannesburg basket increased by R63.43 (1.4 percent), and R440.88 (10.5 percent) year-on-year, to R4 626.51 in May this year.
The Durban basket increased by R126.54 (2.8 percent) and R563.53 (13.6 percent) year-on-year, to R4 709.59.
The Cape Town basket increased by R14.10 (0.3 percent) and R400.63 (9.9 percent) year-on-year, to R4 444.52.
The Springbok basket decreased by R32.65 (-0.7 percent) and increased by R372.39 (8.2 percent) year-on-year, to R4 927.36. In April, the Springbok basket increased by R225.37.
The Pietermaritzburg basket increased by R128.13 (3 percent) and R509.10 (12.9 percent) year-on-year, to R4 463.96.
Some 28 out of 44 foods in the basket increased in price.
The significant increases (5 percent and above) were cooking oil (by an average of R24.67 (14 percent) on a 5L bottle, with average price of R201.90 in May), potatoes, onion, chicken livers, inyama yangaphakathi (beef offal), carrots and spinach.
Increases, also included maize meal, cake flour, frozen chicken portions, stock cubes, wors, tomatoes, cabbage, white bread.
PMBEJD said Statistics South Africa’s latest Producer Price Index (PPI) for April 2022 showed that the PPI for Agriculture, Forestry and Fishing was 17.8 percent in April.
There had been a steady incline from February which showed an 8 percent year-on-year increase, and in March an 14.9 percent increase.
It said the escalating inflation trends in producing food at the farm, would mean higher prices on supermarket shelves.
Abrahams said the recent flooding in KwaZulu-Natal (for the second time in a matter of weeks) had forced yet another spike in the baskets of Pietermaritzburg and Durban (the PMB Maritzburg basket spiked by R128.13 and the Durban basket by R126.54).
“These come on top of the extremely high April increases, in both cities. This month the Pietermaritzburg basket (typically an outlier and the lowest priced basket in the index), has passed the cost of the Cape Town basket (R4 463,96 vs R4 444,52).”
He said the heavy rains and flooding impacted on agricultural production and produce and the immediate impact however was on transporting goods on roads.
He said the flooding had caused severe infrastructural damage to a sizeable portion of KwaZulu-Natal’s transportation systems, as well as worsening the already poor road system in parts of the rural agricultural province.
In its Food Price Monitor for May, the National Agricultural Marketing Council (NAMC) said the rise was mainly underpinned by rising agricultural commodity prices globally, which filtered through to the South African market, along with cost drivers that influenced the broader supply chain.
Major factors driving rising agricultural commodity prices included the ongoing war between Russia and Ukraine, which was adding to global supply concerns at a time when stock levels had been declining for consecutive years.
Russia and Ukraine are major exporters of a number of commodities, including wheat, maize, barley, sunflower and sunflower oil.
Weather conditions in the US delayed plantings of summer grains and oilseeds, which further supported price gains.
Weather conditions in key production regions remained a concern, with weaker harvests coming from South America in particular.
Policy actions in response to surging prices in some major producing countries, like the ban on palm oil exports from Indonesia and wheat exports from India.
Animal disease outbreaks like avian influenza and foot and mouth disease.
The council said that furthermore, food inflation was further affected by rising costs throughout the value chain, including rapidly rising fuel prices, electricity prices and electricity supply interruptions.
These rising costs reflect a combination of local and international factors.
It said the exchange rate depreciation continued to influence the cost of imported products, along with global factors that include China’s zero Covid policy, which continued to cause disruptions in manufacturing and global logistics, and the Russian-Ukraine war, which was driving up global energy costs.
BUSINESS REPORT ONLINE