The real threat? The high price of food 5 February 2008, 17:12 GMT + 2
THE Times has begun monitoring the prices of a basic basket of household goods with a view to finding out how inflation impacts on the ordinary consumer. The news is not good. As anyone who has done the monthly grocery shopping will tell you, food inflation in South Africa is out of control. The prices of red meat, chicken and other major sources of protein would seem to be rising at a rate far higher than inflation. So much so that red meat has become a luxury item in many — if not most — households in this country. The deregulation of agricultural markets begun in the dying days of the protectionist apartheid government has led to greater efficiency in the market. But it has also led to some deeply suspect pricing policies. The prices of some staples are now determined according to their dollar value on global markets, which means that when the Rand is under pressure — as it has been in recent weeks — the price of a series of staples rises. This is all good and well except for the fact that these prices do not appear to decline when the Rand strengthens. This sort of “ratchet” pricing has a major inflationary effect and makes the consumer bear all the costs associated with currency movements. The phenomenon of “Agflation” has been identified by a Merrill Lynch report as a dangerous inflationary factor for southern Africa. The Competition Commission has rightly begun looking at the pricing of basic foodstuffs such as bread and milk and has already fined Tiger Brands for price fixing. But this is not enough. Consumers need to stand up and make their voice heard over the extortionary practices they encounter while buying staples.
