SIYABULELA MAKUNGA | Monitoring prices of food items remains necessary for transparency

The rising cost of living and price of food affects us all. That’s why over the past five years, the Competition Commission has continued to monitor the price of essential food items to support transparency in the pricing of these selected food items from the producer all the way to the retailer and consumers. 

In our latest edition of the Essential Food Pricing Monitoring (EFPM) report, released last Thursday, we continue to track food prices throughout the value chains of these food items: sunflower oil, brown bread, eggs, individually quick frozen (IQF) chicken, canned pilchards and maize meal. In the last six months, our team of economists observed that some of the prices of the foods we track have started falling, albeit modestly.

First, let’s unpack the team’s methodology. At the retail level, we analysed the aggregate spread between retail and producer prices. For our analysis, the spread is the percentage difference between the producer price of goods and the retail price.

Importantly, the analysis of spreads is not intended to make inferences on anticompetitive conduct by individual firms, whether acting alone or with competitors. Rather, it is used to assess price transmission through the value chain and show where spreads are expanding and contracting.

Now with a firmer idea of our methodology, let’s unpack our key observations included in this edition of the EFPM report more closely. Egg producer prices are currently cheaper than they were in November 2023. This suggests recovery in the sector enabled by various private and public measures including biosecurity protocols and monitoring programmes, import of fertilised eggs, and tariff rebates.

In a previous edition last year, readers may recall that we listed a shift among consumers towards canned pilchards as an alternative source of protein.

The producer-to-retail spread of canned pilchards has been on a downward trend in the last six months. This illustrates the restraint shown by producers and retailers in their pricing behaviour for canned pilchards continues.

In addition, during the time under review, our team observed lower average retail prices for brown bread. Despite better and more responsive price transmission by producers of sunflower oil, the producer to retail spread of sunflower oil remains at its highest level since 2021.

Each report also includes a deep dive into a certain sector or food item.

Our EFPM report remains more relevant than ever as households continue to juggle a monthly food basket with other financial obligations.

The commission believes monitoring remains necessary to ensure that as costs decline upstream, those are passed through quickly and proportionately to retailers and subsequently consumers.