Competition Commission accuses retailers of stalling on price cuts for consumers

Cost pressures on food are softening, but retailers are not passing these on to the consumer quickly enough, particularly on certain types of food, says the Competition Commission. 

The competition watchdog released its latest Essential Food Pricing Monitoring (EFPM) Report, which tracks essential food prices throughout the value chains of selected essential food items, on 4 October 2024.

It has tracked these since the onset of Covid to protect consumers from exploitation. 

The latest report, by senior economists Khalirendwe Ranenyeni and Kagiso Zwane from the commission’s economic research bureau, suggests that food prices may be starting to stabilise, largely due to the end of rolling blackouts (which stopped on 26 March), the stronger rand and lower fuel costs — factors that had been significant contributors to elevated food prices. Since these were no longer the biggest cost drivers, and weather-related issues like drought and heavy rain have subsided, food prices should ease, but that’s always not the case. 

Retail prices for maize, brown bread and tinned fish were increasing, but stabilising, although sunflower oil and eggs were declining. Despite a decrease in farmgate prices for wheat, the producer price of brown bread has increased. 

The average producer price of cooking oil has dropped significantly, the report said, but it has not translated into lower retail prices. As a result, the producer-to-retail price gap for cooking oil is now higher than it was just before the start of the war in Ukraine.

There are concerns signs that maize meal prices are once again rising due to the drought.

Rolling blackouts have been incredibly disruptive to chicken production, Zwane said, causing longer growth periods for birds, higher feed costs and investments in cold storage and backup power generation. South Africa’s two largest listed entities (Rainbow Chicken and Astral) have reported improved profitability and lower feed costs, but they have the ability to pass through price increases, as well as later agricultural and breeding performance.

Bird flu effects are lingering in the market, the commission noted.

A week ago, the South African Poultry Association and the FairPlay Movement reiterated their call to exempt specific chicken products from VAT to provide relief for low-income households and boost the poultry industry. Izaak Breitenbach, CEO of the association, said avian influenza cost the industry more than R9.5-billion – money that they can’t afford. “Consumers are cash-strapped. They can’t pay for increased costs due to avian influenza and the fact that we can’t vaccinate against it, as they do in France.” 

Food security concerns