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Cape Town - Shoprite CEO Whitey Basson on Monday cautioned against those pushing unnecessary price increases “fuelled by the frenzy emanating from recent reports about spiralling costs”.
Shoprite Group cautioned against “food price doomsayers” in a statement, saying Shoprite will “act strongly in the interest of consumers and not tolerate food price increases which are not based on fundamentals”.
This warning comes after Minister of Agriculture, Senzeni Zokwana last week warned businesses suspected of profiteering from a drought by raising the prices of staples such as bread would face the wrath of competition authorities, Reuters reported.
"What we are witnessing is a pattern of profiteering in the basic food manufacturing sector that is now causing untold suffering to our most vulnerable citizens," said the Consumer Action Network and the South African Food Sovereignty Campaign.
In reaction, Shoprite said on Monday that it will lock the price of brown bread across the country at R4.99 - less than it cost a year ago.
Food costs have gone up by 9.8% year-on-year (y/y), Statistics South Africa revealed last week, with vegetables (18.7%), fruit (18.7%), oils and fats (18.1%), bread and cereals (13.3%) and sugar and desserts (11.7%) increasing the most.
Overall, Consumer Price Inflation decelerated from 7% (y/y) in February to 6.3% in March.
“While the drought and weak rand have undoubtedly pushed up food inflation, there are signs that upward pressure on food prices could be starting to ease,” Shoprite said.
Shoprite said that when relief from the current drought occurs, basic commodity prices will normalise again and, combined with the rand's recent strengthening against the US dollar to levels last seen in August 2015, the price of imported products will also start easing.
Basson assured consumers that there are still affordable food options available in the short term to help budgets go further.
He said that regardless of the pressure on retailers to accept and pass on higher prices, Shoprite will “fight relentlessly to keep prices lower for its customers”.
“While the country's official food inflation spiked to 9.5% in March, Shoprite's selling price inflation for the same month was less than half that at 4.3%,” the group said.
“The price reduction will be maintained for an extended period, and more food products will also be subsidised over the next few months to cushion the impact of inflation on South African consumers,” it said.
Shoprite said cheaper foods like pork, frozen chicken, UHT milk and canned vegetables have shown decreases. Starch substitutes like pasta over potatoes was not impacted to the same extent and can help consumers' budgets go further. Frozen vegetables have also experienced far lower price inflation of around 2% compared to fresh vegetables.
