South Africans have faced a highly stressful and financially challenging year, under the weight of the global Covid-19 pandemic and the nationwide lockdown, put in place to combat its spread.
The country’s already strained economy buckled under the pressure, leading to business closures and job losses – with little in the way of government interventions and reforms to ignite recovery.
Stats SA’s latest Quarterly Labour Force Survey has shown the extent of the damage, with the group recording 2.2 million jobs lost over the lockdown. According to the latest data, over 20 million South Africans were economically inactive over the period.
It’s under these adverse conditions that South Africans are more price sensitive than ever before – with pressure on retailers to keep food prices as low as possible.
The Competition Commission recently published its latest report on food prices during South Africa’s coronavirus lockdown, showing that, while the onset of the Covid-19 pandemic came with some short-term pricing effects at a wholesale level – particularly on essential food products – all products where a pricing spike was observed also showed an easing of prices after this period.
However, the commission said that there is some concern in respect of retailers and retail markets.
The analysis shows that for some essential products, like potatoes and onions, the margins earned by retailers on the producer price (the wholesale price) have grown substantially over the lockdown period due almost entirely to increases in retail prices.
BusinessTech has tracked a basket of goods commonly found in middle class household shopping carts for the last five years. The 2020 basket, after the worst of the lockdown, averages at 5.6% higher than in 2019, reflecting the price spikes, despite a low inflation environment.
Some products however, have showed an average decrease in price year-on-year.
The biggest price jumps were recorded in flour, rice and sugar, where year-on-year increases averaged between 12% and 36%.
Among South Africa’s major retailers, Woolworths Food still remains the most costly option for shoppers – however, it’s not across the board.
Pick n Pay, which is competing in a dual market (both premium and cost-saving) came in with the second highest-priced basket, largely due to the price of Snowflake flour relative to its competitors.
Following feedback from Pick n Pay in 2019’s comparison, we have this year included a second measure for the group, substituting PnP branded items with the group’s more affordable No Name Brand items, where applicable.
Pick n Pay is the only retailer to have two ‘house’ brands, with the group saying that its PnP brand offers a more premium alternative to No Name Brand, which targets affordability.
While No Name Brand makes available a host of cheaper products, only two items are applicable for substitutes in the BusinessTech basket, making it 8.6% cheaper than the PnP premium basket, overall.
A third item, No Name Brand sugar, was available, priced at R38.99 in store. While this is a lower price than the PnP branded sugar, it is for a 2kg bag, compared to the R44.99 for a 2.5kg bag under the PnP brand. On a per kg basis, the No Name sugar is actually more expensive at R19.50 per kg, versus R18.00 per kg for the PnP brand, so the cheaper option was taken.
Pick n Pay’s No Name basket compares favourably to the Checkers basket – though the latter remains the most affordable overall, coming in with the cheapest price in six of the 12 items measured.
Spar, as in previous years, sits in the middle of the competition. Of note is that Spar is franchised, and prices and items can vary from store to store.
Comparing basket prices from 2019 to 2020, Woolworths saw the biggest price increase, with Spar’s prices seeing the smallest jump.
- Woolworths: +8.2%
- Checkers: +8.1%
- Pick n Pay (Premium): +6.9%
- Spar: + 5.9%
Overall, you would pay 46% more for the average BusinessTech basket, compared to five years ago.
The BusinessTech basket comprises 12 common food items that would be found in a middle class family shopping basket. It does not include items where prices are sold on a per kg basis (like meat, or cheese), to draw as fair a comparison as possible.
Prices were sourced in-store from stores around Centurion and cross-checked online, where applicable.
Promotional prices, where marked, were not taken into account. Woolworths’ self-raising flour prices and Spar’s house brand rice were determined on a per kg basis. In-store prices are subject to change depending on individual regions and promotions.