Focus on SA’s Competition Commission food price monitor

Amidst the bustling food market in South Africa, there has been a mix of good and bad news when it comes to the prices of essential food items. The Competition Commission, in its essential food pricing monitor report, has observed a modest decrease in prices for some food items. Kagiso Zwane, Senior Economist at the Competition Commission, joined CNBC Africa to discuss the latest trends in food pricing. Let's delve into the key points discussed in the interview. One of the positive trends noted in the report is the decrease in the price of canned poultry. Retailers have shown restraint in pricing this essential product, resulting in encouraging trends at the retail level. Additionally, the pricing of IQF chicken, also known as a bry pack, has continued to show constrained price paths. Another noteworthy decrease has been observed in the price of bread, despite some pressures at the producer or factory gate level. Moving on to the producer price inflation numbers released by Statistics South Africa, certain food items have seen an increase in prices at the factory gate. Fish, grain mill products, and starches have shown year-on-year price increases, raising concerns about potential future price hikes for these items. The Competition Commission's monitoring mechanism, known as the rocket and feathers effect, aims to track the extent and speed of price changes in response to cost fluctuations. Zwane emphasized the importance of vigilance in monitoring food prices, especially in markets where competition is not robust. He highlighted the potential for slow price transmission or overcompensation for cost increases, underscoring the significance of ongoing monitoring efforts to ensure fair pricing in the market. Despite the positive trend of price decreases, Zwane acknowledged that food prices in South Africa remain high, posing risks to household food security. The Competition Commission's monitoring indicates that prices have stabilized at a higher level, albeit modestly decreasing. Zwane pointed out that certain costs, such as energy, transport, and municipal services, contribute to the high prices observed in the market. Regarding the expansion of zero-rated goods announced by the finance minister, Zwane noted that the Competition Commission would adapt its monitoring to incorporate newly designated essential food items. As the list of zero-rated products expands, the Commission aims to track these items to ensure responsive regulation and fair pricing practices in the market. In conclusion, while there have been modest decreases in food prices for some essential items, challenges remain in ensuring affordability and accessibility of food for consumers. The Competition Commission's efforts to monitor and regulate food prices play a critical role in promoting competition and fair pricing in South Africa's food market.