August 2020 Household Affordability Index PMBEJD

PMBEJD Research Report & August 2020 Household Affordability Index: Food Prices up again in August

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Food prices up again in August.

The cost of the PMBEJD Household Food Basket increased sharply between March and April and continued its upward trend, albeit at a slower rate until June. July saw a drop in the cost of the basket. It appeared, on the trends in our data, that food prices were stabilising but August is again showing an increase.

The highest food price spikes happened between March and April (5,8% or R187,08), April and May showed lower increases (1,8% or R62,84), May and June, saw a 0,4% or R15,31 increase, and June and July showed a decrease in prices of -2,1% (-R73,09). Now, however between July and August, prices increased by 1,7% (R57,85). The upward trend in August suggests that prices are again on the rise. This is very worrying as increases are happening off a high base. We had not expected an upward movement so soon, nor had we expected the increase to be as sharp as it is. We do not know why prices have increased in August: many of the disruptions that had caused food prices to spike from March are no longer at play and South African agricultural output is strong.

Between July 2020 and August 2020, the cost of the Household Food Basket increased by 1,7% (R57,85). Over the past five months of lockdown, the cost of the basket increased by 7,8% (R249,99); and year-on-year the cost has increased by 13,2% (R403,46). The total cost of the basket in August is R3 470,99.

The picture coming out of the Pietermaritzburg data is not good. The foods which have started spiking again, are the core staple foods in the household trolley. Core staple foods are prioritised first in the household food purse. Price escalations on the core foods determine whether families are able to keep hunger at bay and enable meals to be cooked. Price increases on core foods also act to reduce the spend on dietary diversity essential for families to secure proper health. There is not a lot women can do in the face of rising prices on core staple foods. It is not really possible to reduce the volumes, or substitute them with other foods, or drop them out of the trolley.

Between July 2020 and August 2020, the cost of these core foods increased by 2,3% (R31,75). Over the past five months of lockdown, the cost of these core foods increased by 8% (R106,06); and year-on-year the cost has increased by 15,6% (R193,84). The cost of the core foods is at the highest level we have ever seen.

Government’s intervention to top-up the social grants was necessary. The top-ups have helped, but they have not been enough. The top-ups whilst absorbing some of the food price escalations have not been sufficient to protect families from the negative impact of the lockdown or Covid-19. The situation would not have changed enough by October 2020 for the top-ups to be withdrawn. If we withdraw the top-ups too soon, millions of households will be in a worse position then they were pre-Covid; and be plunged into a depth of poverty that this country has not yet seen. It will then become extremely difficult to support a recovery in the economy and society.

Whilst South Africa seems to mostly be coming around to the realisation that Covid is not just something that has a short-term time period of economic consequences. Most of us are not yet aware of the depth of the consequences (households are not absorbing the shock of Covid and the lockdown – Covid has broken people; it has broken things), nor that even the extended period of consequences will be much longer then is currently supposed; nor of the magnitude of the changes and socio-economic and socio-political disruptions ahead of us. We are not just going to get out of Covid. This is real and we best wake up to where we are.

We must start understanding this and put instruments in place to properly support families to rebuild their lives, and in a different way to what was before. We suggest that the top-ups be made permanent and increased to enable a more substantial framework of support to families until we are able to see an improvement in employment and/or the ability of people to create a livelihood and when prices come down and stabilise off a lower base. Other instruments also need to urgently come on stream: The Basic Income Grant should be rolled out to enable families a chance to create a livelihood and mothers a chance to feed their families. The National Minimum Wage level will also have to be revised upwards.

[See PMBEJD Research Report: summarised data on pages 2-7, footnotes on page 7, and comprehensive price data on pages 8-10. See full data on August 2020 Household Affordability Index].

August 2020 Household Affordability Index

PMBEJD Research Report 26 August 2020

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