6 essential FOOD items that are cheaper than before
Essential food items are under the spotlight following Treasury's about-face on 2025 VAT increases. Finance Minister Enoch Godongwana proposed an increase in VAT but would counter this by adding more essential food items to the VAT-exempt list.
Nevertheless, data from the latest Essential Food Price Monitoring (EFPM) report suggests many of these items have seen price improvements anyway. The following essential food items in South Africa have shown price decreases (however modest) …
Administered by the Competition Commission, the EFPM tracks a host of essential food items in South Africa. Included sunflower oil, brown bread, eggs, chicken and maize meal:
For the review period, there have been lower-than-average retail prices for brown bread. Moreover, the farm-to-producer spread increased from 75% to 77% late in 2024. However, this expansion occurred due to lower wheat prices, but did not translate into commensurate producer prices. As such, the Competition Commission says this may warrant proactive engagement to analyse producers' financial results.
The report finds that the gap between farm value and producer prices fell from 27% to 23% in Q4 2024. This was caused by lower producer prices towards the end of last year.
Currently, egg producer prices are at their lowest point since 2023. Although prices are still higher than the long-term average. This is attributed to the Avian flu outbreak of late 2023 that severely affected the egg value chain. Since then, while positive, prices have still been slow to recover.
Meanwhile, the price gap between producer and retail prices for chicken is still below 38%. This suggests there has not been a significant change in retailers' and producers' pricing behaviour for this essential food item. However, players in the industry have experienced improvements in operations and profitability due to the easing of load-shedding and other factors. There are still to reflect in more than modest retail price improvement.
Canned pilchards enjoy a steady trend of declining price spreads for this essential food item. Over the past six months it has dropped from 19% to 17%. Nevertheless, this drop in retail price is offset by producer prices increasing over the review period. As a result, the report praised the restraint shown by producers and retailers in their pricing behaviour to ensure affordability.
The essential food item of maize meal has been under immense pressure ever since the midsummer dryness of February 2024. Therefore, the upward pricing trend that began in March 2024 continued for the rest of the year. However, higher maize meal prices have not been fully transmitted to producer and retail prices. As a result, stable average retail prices actually enjoyed a drop from 33% to 26% in Q4 of 2024.
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