South Africa’s leading food retailers have so far managed to keep their average price increases well below the current rising inflation rate, good news for consumers who are battling with rising costs and interest rates.
The Shoprite Group, South Africa’s biggest retailer, said yesterday its price movements had averaged 3.5 percent for the 52 weeks to July 3, with underlying product inflation contained to 3.9 percent, as a result of continued price investment.
Pick n Pay said its South African internal selling price inflation for the period was restricted to 5 percent, below 7.1 percent CPI Food for the 18-week period to July 3.
Meanwhile, Woolworths Food said yesterday its price inflation averaged 3.5 percent for the 52 weeks to June 26, with underlying product inflation contained to 3.9 percent, as a result of continued price investment.
Pick n Pay chairperson Gareth Ackerman said at their annual general meeting yesterday: “We are meeting at a time when our economy is under severe strain. Consumers are really struggling, inflation is on the rise, and interest rates have also increased, adding to their burden.”
He said the worldwide dependence on Ukrainian and Russian wheat that has pushed up the price of bread is just one reminder that South Africa is part of a global economy. Covid lockdowns in Shanghai had also driven up transport and import prices.
“There are many other examples. This means we need to sensibly accelerate our development of local industries, particularly clothing and textiles. We need the government to reduce tariffs on imported fabric and yarn to encourage local manufacturing,” he said.
He said Pick n Pay, just like other businesses, was experiencing significant operating cost pressures, such as “material increases in rates, electricity, utility and fuel costs,” while the July 2021 riots had resulted in “very significant increases in the cost of insurance and security.”
The group’s Ekuseni strategy aims to deliver big cost savings, but Ackerman warned the magnitude of cost inflation currently means that cost pressures will not all be offset by greater efficiency.
Woolworths said it had achieved positive results in the past year in spite of the volatile global backdrop, supply chain disruptions exacerbated by the Russian invasion of Ukraine, the impact of rising inflation and interest rates, and severe load-shedding in South Africa.
Truworths, the international clothing retail group, said in a business update yesterday that in South Africa in the 53 weeks to July 3, a normalisation of the economy after Covid-19 restrictions were relaxed had led to consumers being more optimistic, but the company’s trading was nonetheless impacted by the civil unrest in July 2021,the flooding in KwaZulu-Natal and electricity supply issues.
The headline consumer price index (CPI) forecast by the SA Reserve Bank was last week revised higher to 6.5 percent in 2022, above the 5.9 percent projected earlier, and to 5.7 percent in 2023, up from 5 percent earlier.
BUSINESS REPORT