Apr 25, 2016
In a statement today the Shoprite Group cautioned against food price doomsayers adding that Shoprite will act strongly in the interest of consumers and not tolerate food price increases which are not based on fundamentals.
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 Group CEO, Whitey Basson, said some food prices have stabilised and while it may take some time for other prices to come down, he warned against those attempting to push through unnecessary price increases fueled by the frenzy emanating from recent reports about spiraling costs.
Once 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.
Consumers could take advantage of alternative, cheaper proteins such as pork - where the price has actually declined 4 % -rather than beef, of which the price is 15% higher than a year ago.
The prices of frozen chicken, UHT milk and canned vegetables overall have actually decreased during March this year. Starch substitutes such as pasta over potatoes, which are experiencing high inflation due to the drought, haven't had prices impacted to the same extent and can help consumers' budgets go further.
Not all items have been equally affected either. Frozen vegetables for example, have experienced far lower price inflation of around 2% compared to fresh vegetables (carrots for example are up 60% due to the drought) because of the lag effect on their price combined with longer term procurement contracts that have been secured by the Group.
Basson said that regardless of the pressure on retailers to accept and pass on higher prices, Shoprite would continue to 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%. Shoprite Checkers also had the lowest internal food inflation of all four major supermarket chains according to most recent published financial results.
To assist its 23 million loyal shoppers, Shoprite also announced that it has locked the price of its own bakery loaves of brown bread across the country at only R4.99 - less than it cost a year ago. 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.