South African Retail Chains Starting to Limit Some Products Due to Rising Prices

Agriculture and Food
South African Retail Chains Starting to Limit Some Products Due to Rising Prices
Photo: Granger Wootz/Getty Images 01.06.2022 1032

Food producers in South Africa say prices will ‘go through the roof’ in the next six months, the shops are beginning to limit the range.

In mid-May, South African media already reported exorbitant prices for vegetable and cooking oil, butter, bacon and more. Food producers and retailers continue to warn of further increases in the prices of bread, meat, pasta and vegetable oil in the coming months. 

Stores began to remove certain items from their assortment, such as sunflower oil and products associated with it. These measures have hit in response to higher internal commodity prices and supply scarcity as exports from Ukraine dropped.

Tiger Brands, South Africa’s largest food manufacturer, is the latest company to warn that prices for basic grocery items will “go through the roof” in the coming six months.

Tiger Brands expects inflation for some food categories such as bread, maize meal and baking flour, to rise by between 15% and 20%. According to the latest figures from Statistics South Africa, in April the headline inflation rate for all food categories was 6%.

“We don’t see the end [of high food inflation] anytime soon. The reality is that everyone is bracing themselves for this to continue for a fair amount of time,” 

Tiger Brands CFO Deepa Sita said.

Thulani Mandiriza, the Principal Economist at the Competition Commission, said that the Commission asks retailers to justify price increases.

 "We understand the circumstances: supply chains are disrupted, input costs have risen, etc. Yes, prices are inevitably going up, but for us it is important to what extent. A 20% increase in the price of sunflower oil in a month is alarming”.

According to Mandiriza, the Commission takes into account that businesses that operate in the Consumer Goods and Retail (CG&R) sector are having to contend with serious supply chain disruption caused by geopolitical and environmental challenges, made worse by the pandemic, but also impacted by a lack of infrastructure. However, suppliers and retailers should carefully consider any price increases and ensure that they are able to be justified.

In April, Statistics South Africa reported that the cost of fats and oils increased by 9.5% month-on-month in March due to this supply constraint. Globally, sunflower prices are now 45% higher compared to a year ago.

Source: Daily Maverick, Business Tech

food markets  South Africa 

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