The ongoing drought is negatively affecting food production and most consumers are feeling the effect of food price increases in their pockets.
In July, the annual rise in electricity and municipal rates and taxes will also take effect. The higher fuel price, that increased by 86c/l (for 93 octane petrol) in April and another 12c/l earlier this week, will also have trickled down to the prices of almost everything. Neil Roets, CEO of the debt management firm. Debt Rescue moreover expects a further repo rate increase of 125 basis points because of inflation in general and food inflation in particular, so some clever budgeting will be needed.
George Business Chamber President Dr Willie Cilliers is expecting fairly difficult conditions over the next few months. “The income of small businesses, which are the core of our local economy, is also under pressure. During this time businesses should look to streamline themselves and, if needed, rather scale down and not incur debt.”
A shocking 51% of respondents in a survey by debt counselling company DebtSafe last year said that they were not able to meet their minimum debt repayments every month.
Cilliers foresees that the agricultural situation can still worsen before it gets better again. “It can take till the end of the year before it turns around.” But he says a positive, ‘can- do’ outlook is important. “Rather than being negative, people should plan, economise and make provision for the tough times. Reduce spending on things like entertainment and fuel and look where you can save in the household budget.”
In a statement issued on Monday, Shoprite CEO Whitey Basson said there are still affordable food options available in the short term to help budgets go further. Consumers can take advantage of cheaper proteins such as pork – where the price has actually declined by 4% – rather than beef, which is 15% more expensive than a year ago. A starch like pasta is also cheaper than potatoes, which are experiencing high inflation due to the drought.
Group’s internal food price inflation was 2,4% for the six months to February compared with StatsSA’s food inflation figure of 5,9% for the same period. This is thanks to their policy of tough negotiations with suppliers, according to corporate communications manager, Sarita van Wyk. Shoprite has also locked the price of its own bakery loaves of brown bread on R4,99 until the end of June this year.
She says the price of potatoes is expected to start easing in the coming months due to increased availability when winter production area crops come on stream. Basson also says there are signs that upward pressure on food prices could be starting to ease.
The local fresh produce supplier Farmfresh Direct is trying to keep prices as low as possible, says owner Shelley Viljoen. Prices of locally produced crops that they supply, such as cauliflower, broccoli, beetroot and salad items, including tomatoes, have been affected only by an annual increase to keep up with inflation.
“The local farmers in the area have been great. They really want to give customers the best prices. It remains challenging to keep the price of potatoes and carrots lower as it is difficult to source them because of the drought.”
Second income source
Cilliers envisages that many people will be seeking additional income sources in this tough environment.
For people like them, a newly established web site, BetterWage. com might provide a way to generate extra earnings. It shows people how they can make money doing tasks on the Internet. Says the local co-founder. Rudie Shepherd, “It is a new venture that sprouted out of a need to help people get jobs in these.