Inflation breaks families

2008-03-08 00:00

Devastating price rises in basic foods and domestic necessities in the past 12 months have shattered the budgets of average families whose incomes don’t match the increases, and have left them forced to live on money they don’t have.

"Day-to-day basics are getting beyond the reach of ordinary people," the vice chair of the South African National Consumer Council Union, Ina Wilken, told Weekend Witness.

"It has reached the stage where people are cutting back on such vital items as medical aid and insurance cover. It will have serious consequences for the whole country.

"Poorer people are suffering even more," said Wilken. "That’s 10 million people who are struggling just to survive. With each increase in necessities, they get one step closer to the end of their tether.

"But wage earners are not much better off. They have to deal with interest rate hikes, rising fuel prices, increasingly expensive electricity, inflation and, most of all, the runaway price spiral of food."

The highest rises have occurred in the categories that form the bulk of domestic budgets: food, 25%; transport, 20%; clothing, seven percent (excluding bond repayments).

In a household with a net income of R8 000 a month, at least R2 000 will go to food. A 15% food price increase will wipe R300 off the budget. As reflected in current food prices, this leaves barely enough to feed two people.

Food prices have risen dramatically in the past year, and in all categories, as shown in the National Agricultural Marketing Council’s food price report, the biggest price rises include cooking oil (66%); vegetables (average of 41%), including potatoes (47%) and excluding cabbages (92%); fruit (apples and oranges, average 26%); fresh milk (37%); maize meal (26%) and eggs (20%). All in one year.

The council, which monitored the figures from January 2007 to January 2008, says the overall food price index (for 67 different food products) increased by 13,4%, with the heaviest increases in grain, dairy, oils and fresh produce.

The report warns that rising food prices "continue to threaten household food security in South Africa". It notes that the year-on-year increase is 9,3%, which is 3,3% higher than the Reserve Bank’s six percent inflation target.

Cold comfort for consumers is the list of products that did not exceed the inflation rate, which included teabags (3,4%); sugar (2,85%); polony (1,8%) and pork sausages (5,94%). The only item that fell in price is good news for dieters and rabbits — lettuce prices dropped by 13%.

Rural dwellers fared a little better in some categories, and worse in others. They are paying 10 cents less for a loaf of brown bread and R2,40 less for 750 ml of cooking oil. But they are paying R4 more for five kilograms of maize meal; R3,80 more for 2,5 kg of sugar and R1,90 more for tinned pilchards.

The report discloses that brown bread has increased by 34% and white bread by 28% since 2003 and that prices will continue to rise with the price of wheat. The basic reason for this is that local wheat prices are now permitted to be linked to the international price, while at the same time there is a decreasing global supply of wheat and a rising South African dependence on wheat imports.

It notes that Eskom’s power cuts are an aggravating factor in the grain and milling industries, with one hour of load-shedding costing at least 150 tons of wheat, which is the equivalent of 250 000 loaves of bread.

The report ends on a slightly more optimistic note, saying that prices will become more stable, and that a favourable exchange rate and good weather may prevent rapid future increases.

Wilken says it is difficult to offer advice to consumers in the present circumstances. "We just have to learn to make do with one car, go out less, not try to keep up with the neighbours, eat more simply and do without whatever we can," she says.

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