BUSINESS NEWS - Low-income consumers still battle high food prices with data for January showing an increase of R125.08 (2,9%) compared to December and R349.82 (8,6%) compared to January 2021.
Higher transport costs due to fuel increases and higher electricity cost will make life unaffordable for these low-income consumers.
The January 2022 Household Affordability Index of the Pietermartizburg Economic Justice and Dignity Group tells a sad story of price increases across the board on most items in the food basket that is surveyed every month at 44 supermarkets and 30 butcheries in Johannesburg, Durban, Cape Town, Pietermaritzburg and Springbok.
The average cost of the household food basket for January this year was R4,401.02 compared to R4,275.94 in December 2021 and R4,051.20 in January 2021. Of the 17 foods considered the core foods which should reasonably be found in most South African homes and that are prioritised and bought first, 15 cost more, while the prices of 35 of the 44 items in the basket increased.
The group says the spike of 2.9% month-to-month, the 8.6% year-on-year increase, with a Rand-value of R349.82 as well as the average cost of the basket is very high. Johannesburg, Durban and Pietermaritzburg are now showing annualised inflation of over 9%.
These figures may not sound too bad for higher income consumers, but for low-income consumers such as general workers earning the National Minimum Wage (NMW) of R3,643.92, this is devastating. Transport to work and back costs an average of R1,344 (36.9% of NMW) and electricity an average of R731.50 (20.1% of NMW).
These non-negotiable expenses take up 57% (R2,075.50) of the NMW, leaving only R1,568.42 to pay for all other household expenses. The group says if all this money was used for food, it would provide R348.54 per person per month for a 4.5 (the latest ratio of how far a wage for a Black South African worker must go).
This is 44% below the Food Poverty Line of R624 per person per month.
National Minimum Wage no help for low-income consumers
With the proposal for the NMW increase in March 2022 of CPI Headline +1% (even less than last year, which was a +1.5%), the group says applying inflationary linked increments to a poverty-level base “just keeps workers in poverty from one year to the next”.
“That the increments are linked to inflation for the previous year and not the projected inflation for the year ahead, deepens worker poverty. Workers spend most of their wage on transport, electricity and food. December’s CPI puts annualised inflation on public transport at 9.9%, electricity at 14% and food at 5.9%.”
For 2022, the group expects fuel prices to increase with international crude oil prices. Eskom has applied for a 20.5% increase. Electricity and fuel increases, as well as local climatic and agricultural constraints and global factors means that a CPI Headline + 1% will not cover the real inflation rate experienced by millions of workers and erode the value of the NMW, already at a poverty-level, further.
The impact of unemployment
In addition, Statistics South Africa’s latest Quarterly Labour Force Survey shows the number of Black South Africans who are unemployed now exceeds the number of Black South Africans who have work, with 11.2 million unemployed and 10.7 million employed.
The expanded unemployment rate for Black South Africans is 51.1%, while 565,000 black South African workers lost their jobs in the last quarter.
“Every single job lost is money lost to the economy, which means that the item you are producing just became that much harder to sell.
“It is a death spiral. You sell less, so you produce less and so you employ less workers and those that are still employed watch their wages dwindle from almost nothing to nothing.
“The hollowing out of workers’ wages then ignites the meltdown because you are then dealing not only with millions of wages no longer available to the economy, but the available wages are so low and have to spread so much further to support so many more people, that they are unable to demand anything more than basic survival goods. Then businesses left right and centre start falling.”
The value of the wage is therefore important and the group says if we want to get the economy moving, increasing the NMW to a level which allows workers and their families to live healthily and productively, while providing a little bit more to demand goods and services beyond food, lights and taxi fare, would be an investment in getting the economy going.
High food prices keep poor children away from nutritious food
The average cost to feed a child a basic nutritious diet was R776.29 in January this year, an increase of R28.34 compared to December last year and an increase of R55.13 or 7.6% compared to January 2021.
The Child Support Grant of R460 was 26% below the Food Poverty Line of R624 in January and 40% below the average cost to feed a child a basic nutritious diet at a cost of R776.29. Government increased the grant by R10 in February last year.
“Perhaps it is ignorance or short-sightedness on government’s side which does not see proper nutrition as important for our millions of children and the future of our country and all of us in it? But it happens every year when the annual increase becomes more and more ridiculous, suggesting this is not a mistake, but intentional,” the group says.
