With the cut in the petrol price for the second time this year, many consumers are hoping for a drop in transport costs and food prices, but have been left disappointed. According to trade union Solidarity, while there is a connection between the fuel price and food prices, it does not warrant a change in food prices. Solidarity senior economic researcher, Paul Joubert said the connection is weaker than what most people seem to think.
“To use a crude example, it is not as if fuel is used to make bread. We know that wheat makes bread, however there are other input costs which are not affected by the petrol or the drop in the petrol price and therefore. Food prices are not directly affected by the petrol price or any decrease or increase thereof as much as consumers would like to think,” said Joubet.
In explaining this, he said there are basic logistical costs because the bread or produce needs to be transported from the place of produce to the market place to be sold. This is a tiny fraction of the final input cost and the final retail price that is seen on the shelf.
But Cosatu in the Western Cape has called for a reduction in food prices following the drop of the fuel price. They have warned of protest and boycott action on major retail supermarkets, should they not see a change in basic food costs.
The union’s provincial secretary Tony Ehrenreich said the biggest problem that exists in the South African economy at the moment is the rise in food prices, especially basic food prices.
“And what we see is that as the price of petrol has increased of the last three years, business have wasted no time in adjusting the prices of their food,” said Ehrenreich.
While businesses or supermarkets claim that transport is a huge proportion of the input costs in the food distribution, this was misguided, he said.
“We have seen a significant reduction in the petrol prices in the last few months and that saving must be part of the consumers, because the consumers especially those at the bottom end of the market, always has the biggest problem with rising fuel prices and continuing to be able to provide meals for their families,” added Ehrenreich. VOC (Imogen Vollenhoven)