- Producer prices for food products fell 0.6% year-on-year in August, with meat and grain milling prices dropping much more sharply.
- The figures raise a key question for consumers: how quickly do lower production costs translate into cheaper groceries?
South Africans struggling with expensive groceries may finally have some good news, food is getting cheaper at the factory.
But the big question is when shoppers will feel it at the till.
South Africa’s producer price inflation slowed to 5% in August, down from 5.7% in July. More importantly for households, producer prices for food products were 0.6% lower than a year earlier. Meat and meat products fell by 5.8%, while prices for grain mill products, like maize meal and flour, were down 9.6%.
That means some of the food leaving factories and processors is costing less than it did a year ago. But that does not automatically mean the same percentage decrease will appear on supermarket shelves.
There are several costs between the producer and the shopper, including transport, electricity, packaging, storage, wages and retailers’ own costs. And consumers have not seen food prices falling across the board. Stats SA reported last week that food and non-alcoholic beverage inflation actually picked up slightly in August, the first acceleration in nine months, even though overall food inflation remains relatively subdued.
The difference between producer and consumer prices creates an important question for households already watching every rand: when production costs fall, how much of that saving reaches them?
The next test will be staples such as maize meal, bread and meat. If factory-gate prices continue falling while shelf prices remain stubbornly high, retailers and food manufacturers could face increasing questions about where the savings are going.
