Despite a significant drop in diesel prices this week, this is unlikely to translate to lower food prices on store shelves in South Africa, says Niel Roets, CEO of Debt Rescue.
The Department of Mineral Resources and Energy announced a steep drop in the price of diesel between R1.52 and R1.57 a litre for December, on the back of global oil prices plunging to their lowest levels since 2021 in November and a strengthening of the rand against the US dollar.
While the drop is certainly welcome after months of sharp hikes, Roets said that there is very little to celebrate as the drop is tempered by yet another hike in the price of both 93 and 95 unleaded petrol of 59c a litre.
This is substantiated by the latest Household Affordability Index by the Pietermaritzburg Economic Justice & Dignity group (PMBEJD), which shows that the price of staple foods in South Africa continued to rise in November. According to the PMBEJD, times are going to get tougher for consumers.
The PMBEJD basket comprises 44 core food items most frequently purchased by lower-income households, who make up most households in the country.
The group’s basket of nutritional foods came to R4,835.96 up by R48.13 (1%), from R4,787.83 in October 2022, and up R563.52 (13.2%), from R4,272.44 in November 2021.
The year-on-year increase outstrips headline inflation by quite a considerable margin, and even food inflation tracked by Statistics South Africa. Headline inflation was recorded at 7.6% in October 2022, up marginally from 7.5% in September 2022.
According to Stats SA, bread & cereals, meat and dairy are currently driving food prices higher in South Africa. This also reflects within the PMBEJD’s data, which shows milk prices up 12%, bread prices up a staggering 20% and meat prices up between 6% and 16%.
“These are all foods that families need most to ensure nutritional needs are met,” said Roets.