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Sharp drop in food prices could be on cards

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Cape Town - Higher rainfall points to a sharp fall in food prices over the course of 2017, which should alleviate pressure, especially on low-income consumers further down the line, according to Herman van Papendorp and Sanisha Packirisamy of Momentum Investments.

"Elevated food prices have eroded real wage gains for low-income consumers, while financial institutions have tightened credit lending conditions at this end of the market," said Packirisamy.

Although economic times would likely remain challenging, John Loos, household and property sector strategist at FNB, indicated that good news for lower income groups in 2017 would be an alleviation of drought conditions and a meaningful slowing in food price inflation.
 
He told Fin24 that last year the gap between high- and low-income groups widened. He thinks it was due to food expenditure being such an important factor for low-income groups.

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