The latest inflation data released by Statistics South Africa on Wednesday morning showed a declining annual inflation rate from 7.2% down to 6.9%, as forecasted. This latest decline is the third consecutive one since December last year; which could go a long way in convincing the Monetary Policy Committee (MPC) to keep interest rates unchanged – or even moderately cut the prevailing rates – during the next MPC meeting on the 30th of March.
The inflation joy was eclipsed, however, by red-hot food prices that continue to soar amidst a crippling energy crisis in the country. Average food prices increased by a hefty 110bps from 12.7% to 13.8% in the latest report, suggesting retailers are feeling the pressure on their margins and have started passing on the cost to the consumer. Bread and Cereals continue to remain above the 20% level, reporting a 120bps increase to 21.8% while both processed and unprocessed foods elevated to 16.2% and 11.4% respectively.
Shoprite Holdings – which owns Shoprite and Checkers stores – recently confirmed the retailer hiked its prices by 9.4% in the last six months of 2022, as well as accumulated a R560 million bill for generators during load shedding periods. Pick n Pay followed by revealing a run-rate of almost R35 million on diesel per month in the last 10 months of trading, suggesting more pain could be on the way for consumers.
With the current energy crisis estimated to persist for the next 12-18 months, government needs to find a way to protect the consumer from the abnormally high food prices.
