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Price 'anguish' aheadDate Posted: Thursday 01-May-2008By ARTHI SANPATH, RIVONIA NAIDU and SAPA
As the price of rice, bread and petrol increases in the next few weeks, economists have warned South Africans to brace themselves as the country heads for difficult times.
Economists said tough times lay ahead for consumers and they should tighten their spending.
On Wednesday, agriculture minister Lulu Xingwana tabled "drastic" measures in cabinet aimed at alleviating the impact of escalating food prices on the poor.
Government spokesperson Themba Maseko said some of the interventions would focus on providing a safety net to the poor, strengthening poverty alleviation programmes such as school feeding schemes and promoting agricultural production and investment.
Between January 2007 and January 2008 the price of brown and white bread increased by 16,21 percent and 20 percent respectively, while dairy products increased by 33,6 percent.
The increase in the retail price of petrol by 55 cents a litre will result in a "period of anguish" for South African households, Absa economist Chris Hart said. Petrol should rise to just under R9,50 a litre. And if you think that's steep, chief economist for Econometrix, Azar Jammine, said South Africans should remember that we were already paying 30c less for petrol in relation to the rapidly changing oil price. Diesel is also set to climb well above R10 a litre for the first time.
Hart warned the increase would cause food prices to rise and lead to fuel inflation, which was already more than 10 percent.
He said the country was expecting a hike in electricity prices as well as an increase in the rate of taxes in the coming months.
"We will see a period of anguish. A significant number of households will lose their houses and cars because of the pressure of the high prices," Hart said.
Trade union federation Cosatu is planning protests against food price increases across the country. It will reiterate this call today during its nationwide May Day rallies.
About 150 Cosatu marchers protested in the city centre yesterday against escalating prices of basic food items, petrol costs and "Eskom's poor planning" they say are crippling the poor.
Cosatu said because low income earners spent 51 percent of their income on food it was even more "criminal" that "greedy" companies were fixing the price of bread and dairy products at the expense of consumers.
Economist Mike Schussler said there was a possibility of a high interest rate hike next month.
Major national retailers said yesterday that they will increase the prices of staple food items such as rice and bread in the next few weeks.
Shoprite and Spar confirmed that the price of rice will increase this month by as much as 20 percent.
Spar also confirmed that prices of grain products would be increasing.
The price of bread is also expected to increase.
"Bread suppliers Albany and Blue Ribbon will put through price increases ranging between 15 percent and 25 percent on 5 May. Sasko is phasing in a similar increase," said a Shoprite spokesperson.
Spar merchandise executive Mike Prentice said consumers can expect bread prices to increase by up to R1 a loaf within the next two weeks.
"The price of flour is set to increase by 17 percent by mid May," he added.
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