October 2021 Household Affordability Index and Report

Times are tough. Times are going to get tougher. Food prices rise again.

The average Household Food Basket increased by R98,08 (2,3%) month-on-month, and R400,83 (10,2%) year-on-year. In October 2021, the average Household Food Basket costs R4317,56. The rise in food prices in October is in line with our predictions and are set to continue into 2022.

The massive electricity tariff hike of ±14,59% effected in June and July 2021, had to result in price hikes of goods and services down the line. These increases are now reflecting in higher food prices on supermarket shelves.

October further typically sees higher vegetable prices (specifically potatoes, butternut, and tomatoes) due to seasonal changes: potatoes, for example have been harvested in the Free State and Limpopo (unfavourable weather conditions resulted in lower yields), and the next crop in KZN will be ready from December. We are also seeing some anomalies in food prices across areas, with a spike in maize meal prices in parts of Joburg and Cape Town (South Africa has a bumper maize crop this year), including higher milk, amasi and egg prices, higher poultry and meat prices, and bread prices in some areas. Cape Town saw a surge in prices this month of R174,49 (4,2%) month-on-month. Cape Town prices have tended to be moderate over the past year, October has seen a shift which brings the total cost of the basket (R4280,67) more in line with Joburg (R4305,69) and Durban (R4327,06) prices.

Rising food prices, which are likely to continue into 2022, will put severe pressure on households whose incomes remain low through low baseline wages and low-level social grants and whilst jobs remain elusive. Monthly food expenses take up a large portion of income. Higher food prices, together with higher electricity prices and taxi fare hikes, are putting enormous pressure on the household purse and the family plate.

The cost of the household food basket is very high and families can’t afford it. We remain in an emergency food crisis, and this crisis is set to deepen. Our problem is not only that we are going hungry but what is on our plate when there is food. The higher cost of foods has emptied out the trollies of any nutritional diversity. Women tell us that “whatever we have got; we eat, it doesn’t matter anymore as long as we can eat it.” White starches, and sugar, and salt and oil fill our plates – but in time, our children’s bellies cry out for good quality meat protein, sugar beans, and dairy and eggs, calcium, vegetables and fruits, and vitamins, minerals, and fibre. We will pay a very high price for not making proper nutritious food for our children a key political priority.

Projections for the next several months, based on past data, and current factors suggest food prices will rise through to 2022.

• The higher electricity tariffs, including the additional costs of sourcing back up supplies amid loadshedding, load reduction and black outs, will increase the cost of production, transport, and storage.
• The forthcoming fuel price increases in November will run through the value chains making agricultural production and transport more expensive.
• The escalating crude oil price which is predicted to continue its surge will not only increase fuel prices but will increase the cost of many inputs into agriculture, processing, and packaging (crude oil is a core component in fertilizers and pesticides, plastics, and packaging). If the ZAR weakens, these costs will increase further.
• South Africa’s railway system in many parts of the country is crumbling, and more of our goods and services are being transported by road, and therefore require fuel. Pressure on our highways will increase adding longer travel times on the road (this adds to the cost of fuel and cold storage, amongst others). The heavier traffic and heavier cargo further result in a deterioration of road surfaces and will require more maintenance, again longer time on the road, including damage to vehicles.
• More incidences of civil unrest and disruptions of major highways and logistics in general must be a factor in our future, given the upcoming elections, the period thereafter, and the general desperation and frustration of so many of our people.
• Finally, we are moving into the festive season, where retailers typically hike their prices.

Key data from the October 2021 Household Affordability Index

The October 2021 Household Affordability Index, which tracks food price data from 44 supermarkets and 30 butcheries, in Johannesburg (Soweto, Alexandra, Tembisa and Hillbrow), Durban (KwaMashu, Umlazi, Isipingo, Durban CBD and Mtubatuba), Cape Town (Khayelitsha, Gugulethu, Philippi, Langa, Delft and Dunoon), Pietermaritzburg and Springbok (in the Northern Cape), shows that:

• In October 2021: The average cost of the Household Food Basket is R4317,56
• Month-on-month: The average cost of the Household Food Basket increased by R98,08 (2,3%), from R4219,48 in September 2021 to R4317,56 in October 2021.
• Year-on-year: The average cost of the Household Food Basket increased by R400,83 (10,2%), from R3916,72 in October 2020 to R4317,56 in October 2021.

Statistics South Africa’s latest Consumer Price Index for September 2021 shows that Headline Inflation is 5%, and for the lowest expenditure quintiles 1-3, it is 6,6%, 6,1% and 5,4% respectively. CPI Food inflation is 7%.

The Producer Price Index for August 2021 shows that agricultural, forestry and fishing was 8,6%.

In October 2021, all household food baskets increased. Cape Town which has tended to be reasonably moderate over the past year, spiked in October by R174,49 or 4,2%, and now shows a similar year-on-year trend as all other areas. Pietermaritzburg also spiked by R111,58 or 2,7% (this off the back of the July unrest which saw the basket move above R4 000 a month). Joburg and Durban also increased, similarly off the back of massive spikes in August 2021. Springbok, whilst its price increases are more moderate, continues to climb.

Table 1: Household Food Baskets showing year-on-year and month-on-month.

Figure 1: Household Food Baskets over the past year (October 2020 to October 2021).

Download the full October Media Statement