By Dylan Bettencourt
- AG Capital analyst Casey Sprake says retailers are squeezed and South Africans cannot handle big increases after recent fuel hikes.
- Anthony Clark from Small Talk Daily says Premier Foods makes 80,000 deliveries daily and expects bread prices to rise soon.
South Africa is heading for food price increases, with market analysts warning that record fuel prices will hit shop shelves within three months.
AG Capital analyst Casey Sprake says there is not much room for retailers to move.
“Retailers are squeezed,” she said. “South Africans cannot handle big increases because of the immediate impact of fuel hikes”
Analysts say there is usually a gap of one to three months before higher fuel prices push up food costs. It takes time for transport costs to work through the supply chain, News24 reported.
Problems with South Africa’s train network mean almost everything moves by road. This means bread, vegetables and chicken will feel the impact first. Both the South African Reserve Bank and Stats SA say fuel is one of the biggest drivers of price increases.
FNB economist Paul Makube expects changes in the next two to three months. He says maize, wheat and sunflower seeds will be hit first, with fruit, vegetables and red meat also at risk.
Anthony Clark from Small Talk Daily says companies that make daily deliveries will feel the pain first.
“Premier Foods makes 80,000 drops a day,” Clark said. “That is a lot of diesel for Blue Ribbon and Albany bread. At some point, they have to raise prices.”
Clark says some chicken prices are already up about R2 a kilo in the last two weeks. If fuel does not come down by May, shops will have no choice but to hike prices.
Sprake says big retailers like Shoprite may handle rising costs better than Pick n Pay, which is currently working to fix its business.
Merlog Foods is calling on the government to secure deals with Brazil to bring in cheaper chicken, warning of a “food security crisis” if bird flu breaks out again.
Pictured above: Food items on display at a South African supermarket.
Image source: File
