Tag: price

By Kaunda Selisho for The Citizen 

The nation will have to pull those belts a whole lot tighter with a projected increase of about R1.14 a litre of petrol.

There seems to be no end in sight for South Africa’s perpetual rise in fuel prices as the Central Energy Fund (CEF) has predicted yet another increase for the month of October.

The CEF report, released earlier this week, attributes the projected increase to a weaker rand and a higher international oil price.

The most recent hike was capped at 5c after government intervention but was dubbed a “once off” to provide citizens a short reprieve after sustained increases over five months in the lead-up to September.

According to the CEF’s calculations, early indicators estimate that the fuel price could rise by R1.14 a litre in October.

Fin24 calculated that the inland price of 95 octane petrol would rise to a possible record high of above R17 a litre, thus affecting food prices and transport costs.

Poor families starved by the price of food

By Sizwe Sama Yende for News24

Poor families have been cutting down on buying proper nutritious food by as much as 26%, and need another R1 062.38 a month to be able to afford it.

The August 2018 Household Affordability Index was compiled by NGO the Pietermaritzburg Economic Justice and Dignity Group. It is in response to the government-commissioned panel of experts’ report on VAT, released last week, in which additional items were recommended for zero-rating. Currently, 19 items are zero-rated for VAT.

The Pietermaritzburg organisation warns that families can no longer afford to eat properly and that no amount of “tinkering around the edges of our economic framework” is going to change this.

It wants all VAT charges to be removed from food in light of the price hikes that have occurred since government increased VAT from 14% to 15% in April.

“If there is a need to recover revenue from food, then it is better if it be recovered off luxury foods, which working class households do not buy and the wealthy do buy,” the organisation’s report found.

“Food is not a commodity. It is better for all of us if we are all able to eat properly and be healthy. Without proper nutrition none of our developmental outcomes will come to fruition. Our education outcomes will continue to be dire, our health sector will continue to collapse as more and more people get sick and – with very little money in the pockets of the majority of South Africans, and child stunting levels at 25% for girl children and at 30% for boy children under the age of five years – we can have no future workforce or political stability, or reasonable economic recovery.”

The VAT panel released its report to Finance Minister Nhlanhla Nene on August 6. It recommended zero-rating white bread, bread flour, cake flour, sanitary products, school uniforms and nappies, including cloth and adult nappies.

The panel also recommended that government should expedite the provision of sanitary products to the poor and ensure that zero-rating did not benefit producers, but rather, accrued to consumers.

Other options

Julie Smith, a researcher at the Pietermaritzburg Economic Justice and Dignity Group, said the country faced a crisis of affordability and suggested options that could be explored if VAT remained the same.

“We are saying government must remove VAT completely. However, there are a number of options that should be looked into. The income levels are too low because of the legacy of apartheid and workers must be paid a living wage. The government can also look into how it can increase the old-age and child social grants,” she said.

“Another option is that government should look into how it reduces the cost of goods and services. Transport to work takes a huge percentage of household incomes. Can we have a way of reducing fuel prices and have a public transport system? In South Africa, transport is privately owned.”

The ever-increasing cost of electricity, said Smith, also had a direct impact on poor households. Zero-rated foods still had to be cooked. “Unless the cost of electricity is looked into, people may have food but they cannot cook because they cannot afford electricity.”

Families need R1 062.38 more a month to be able to afford nutritious food.

The index shows that the cost of foods in the household food basket, a basket designed with women living on low incomes, was R3 009.65. But the median wage for black South African households is R3 000.

The difference in cost between the foods which families living on low incomes try to buy each month, and the foods which families would like to buy and should buy to meet their basic nutritional needs, amounts to R1 062.38.

The food that families need to buy to meet basic nutrition costs R4 072.38 a month.

The situation is worse for families surviving on the R400 monthly child support grant because it is below the poverty line of R531 per person per month. Also, the child support grant is below the cost of a nutritious diet for a child aged between 10 and 13, which is R569.98.

VAT on the household food basket in August, the index found, was R215.77 – or 7.2% of the total household food basket.

“If white bread and cake flour are zero-rated in line with the panel’s recommendations, the savings on the household food basket would be R40.81 a month (R31.46 on 25 loaves of bread and R9.35 on 10kg of cake flour),” the report found.

“This would bring the cost of the household food basket down to R2 968.84 a month. This amount is almost equivalent to the median wage for a black South African household, and this is just food – not transport or any other critical household expenses.”
Removing VAT from peanut butter, an excellent source of protein and fats on children’s sandwiches, the organisation argues, is not going to send the economy into the ashes.

Neither will subsidising eggs, maas, brown bread and maize meal.

Nor will regulating the retailers and the prices on supermarket shelves.

“We are facing probably our greatest crisis, and we are still unable to conceptualise the problem within the broader political economy and deal with its cause. We cannot deal with our food affordability crisis by limiting analyses to losses to the fiscus and evaluating a few chosen goods and services within such a narrow framework of evaluation,” the report found.

“It is not useful to approach problems in isolation or by using the entry point of analysis as ‘whether we can afford this’ or ‘what will the loss to the fiscus be for us?’.”

Takealot guilty of “fake” prices

The Advertising Standards Authority of South Africa (ASA) has found Takealot guilty of selling products at higher prices than what it advertises the goods for.

In a recent sponsored Facebook promotion, Takealot advertised DKNY perfume at R369 – a saving of 62% on the normal price.

When a consumer tried to purchase this product, however, they had to pay over R200 more than the advertised price.

A complaint was lodged with the ASA regarding this practice after Takealot told the client it was “not responsible for advertising appearing on third-party platforms”.

According to the complainant, Takealot told her “its terms and conditions exempt it from liability emanating from its own advertising”.

Takealot responds
Takealot responded to the complaint, stating it is not an ASA member and that the organisation’s rulings are therefore not binding to it.

The online retailer did acknowledge that this was the third complaint of this type brought to the ASA.

It explained there “may be lags in bringing the pricing of third-party advertisers in line with price changes”.

“The product on special had sold out when the complainant claimed the deal, but the advertising had not been changed,” said Takealot.

ASA ruling
The ASA rejected Takealot’s argument that it was not responsible for advertisements from third-party advertisers.

“If Takealot uses third-party advertisers, then it must ensure that checks and balances are in place that such advertisers only display correct information,” said the ASA.

“The reality is that Takealot benefits from the traffic flow to its website and it must take responsibility for the actions of the third-party advertiser.”

The ASA subsequently rejected Takealot’s submission that its advertising is not misleading.

It said consumers are led to believe that advertised products at the discounted rates are available on Takealot, which they are not.

The complaint that Takealot’s advertisement promising a discounted price was misleading was upheld, and it advised the company not to repeat this advertising.

Source: MyBroadband 

Back-to-school stationery price shock

The average stationery list for a primary school child starting Grade 1 has a total cost of between R700 and R1 000 and, while parents would want to compare prices to get the best deals, schools are prescribing certain brands for parents to buy.
Many schools offered parents the option of paying the school for the stationery or purchasing it themselves.

Most parents who spoke to the Daily News on Monday while doing their last-minute stationery shopping felt some items on the list were “overboard”.

Parents believed items such as a box of tissues and toilet paper should be provided by the school.

Different types of crayons, glue sticks and paper reams were some of the items schools required on the first day, but parents said this added another expense to the already exorbitant price of getting children back to school.

The price of a ream of A4 paper of 500 sheets is about R47.99 and some schools stipulated which brand they wanted parents to buy.

Grade R pupils were no exception. A stationery list for Grade R pupils at a Durban North public school with 18 items cost R615.22, excluding an extra R200 for a swimming bag, a chair bag and a library bag.

Five-year-old Thando Mokwena of Westville is attending Holy Family College this year and was busy shopping for stationery with her parents on Monday. Picture: Motshwari Mofokeng/ANA
A mother of a Grade 1 pupil said she thought being told to buy 17 exercise books for her child was a bit too much.

“I have a problem with the school asking me to buy so many exercise books. I know that times have changed and that children these days do more than I did in my time, but I think 17 books are just too much. Asking for four items of glue stick, which cost R56.49 each, to be bought at the same time was inconsiderate,” she said.

She said it would be reasonable for schools to instead ask parents to supply one of each item which could be replaced when they ran out.

Sizakele Mthembu, a parent of a Grade 2 pupil attending a private school in Durban, said she had a problem with schools dictating which brands parents should buy.

“There are retail shops with cheaper options on items such as pencils, glue sticks, wax crayons, rulers, paper reams and ballpoints, but schools ask for specific brands,” she said.

A Grade 6 pupil said: “I find myself having to ask my parents to buy me more glue stick, pens and pencils by the end of the first term. They are stolen,” she said.

Khethiwe Ndlovu, a parent of a Grade 3 pupil, said last year she had dropped off all the stationery on the first day of school and was told not to remove the items from their packaging. That was the last time she saw the stationery.

“The children are made to keep the books at school and only take their homework books home,” she said.

She suspected that schools were supplying other children who did not have.

“I understand the kind of poverty that some pupils come from and, if that is the case, then the school should make us aware of such challenges so that it can be done properly,” she said.

Ntombizodwa Zungu, a mother of a Grade 9 pupil, had the choice of buying her daughter’s stationery from the school but instead opted for shopping around at different retail shops, saving R350.

“Checking for prices beforehand helps and, although it is a lot of work, my secret has always been to buy early and have a proper shopping plan. The last-minute rush would always work out to be expensive,” she said

Vanessa Chetty said she found exercise books were not expensive, but it was the extras, such as dictionaries and crayons, that were.

She said that while they could be used for more than a year, she was forced to buy them twice a year.

Vee Gani, South Durban chairman of the KZN Parents Association, said stationery was expensive and schools and parents should have discussions about making cost effective purchases.

He said when it came to schools’ choice of brands, there was no choice as some cheaper brands were useless.

“I can understand why parents are sceptical about sending more than one item to school for risk of it being stolen or lost.

“But teachers also want to prevent a situation of items being forgotten at home,” he said

By Sne Masuku for IOL

Around 30% of Sappi shares are held by the Public Investment Corp, the Government Employees Pension Fund and the Industrial Development Corp — and that is a fat vote of confidence in the group from government.

This is, after all, a company that has struggled to appeal to the broader market in the years since the global financial crisis began. This is probably because it took seven years to more than double from below R20 to about R40 between 2009 and 2015. Now, having shot up to around R100 more recently, it’s been deemed a great-value share.

Sappi delivered “robust” full-year results to September 2017 on “strong growth” from speciality packaging and its dissolving wood pulp business. Full-year profit of $338m rose from $319m in 2016.

The group has further reduced debt in the period, as it continues to reorientate operations away from the core business of fine-coated paper used in upmarket advertising and publishing materials.

The focus now is on high-margin dissolving wood pulp, also called chemical cellulose, used in making clothing and textiles — and on specialised packaging products.

But the turnaround has been long and slow, and only the most optimistic supporters have stuck around. The recent upward rush may also have reached a peak for now, says Electus Fund Managers analyst Mish-al Emeran, as the “low-hanging fruit” has been picked.

“[There is a] need to strike a balance between growth and the risk of oversupplied markets. We think the share price reflects the turnaround, [but] key catalysts have played out,” he says.

Chemical cellulose is the key area of growth for Sappi, Emeran says. But there could be significant additional global supply in the medium term. In the past year there was strong demand for the product, Sappi says, growing at double digits.

This is why the group’s capital expenditure in 2018 is expected to increase to $450m as it continues to convert mills in SA, Europe and North America to produce greater amounts of its chemical cellulose and speciality packaging. The latter is a sector that has enormously benefited SA pulp, packaging and paper manufacturer Mondi, as the Internet cut into Sappi’s traditional fine-coated paper markets.

Mondi has built up world-class packaging production assets in emerging European markets, while Sappi has been hampered by more expensive output costs at its mills and factories in developed European countries. Mondi only really ever made office paper, so the Internet has not been as damaging to its paper business.

But with the move to chemical cellulose and also speciality packaging, Sappi is starting to reassert itself. Both Sappi and Mondi have significant facilities in SA, Europe and the US, which supply world markets. Meanwhile, with the rand remaining weak, SA is a good place for basic product inputs, including competitive forestry resources.
For Sappi, Europe is its biggest market at 41% of sales, followed by Asia at 26%, and the US 23%. SA accounts for 10% of the total. Coated paper is still Sappi’s biggest product segment, at 56% of all sales. Speciality paper makes up 11%, commodity paper 7% and chemical cellulose 20%. But with spending during 2018 focused on higher-margin growth segments, including chemical cellulose and speciality packaging, this will position Sappi for stronger profitability from 2019 onwards, says CEO Steve Binnie.

“We have been through a period of being very conservative,” Binnie says. “We halved debt over the past four years from $2.5bn to $1.3bn.

“Our success in bringing our debt levels to below our targeted leverage ratio of less than two times net debt to [earnings before interest, tax, depreciation and amortisation] in [financial 2016] meant we could turn our attention to increased investments in growth projects.”

Markets for chemical cellulose are predicted to grow at about 5%/year.

Sappi supplies about 20% of the global market – much of this to China, India and Indonesia. The product is also widely used in cigarette filters, cellophane, pharmaceuticals and in making foodstuffs.

But Binnie says demand for textiles has been so good that Sappi has not yet had the opportunity to enter these other markets.

Emeran says management has done well to turn the business around. He says balance-sheet strength and flexibility have been restored, amid good cost control across divisions. Investors will also be pleased that Sappi’s dividend in 2017 leapt 36% to US$0.15 year-on-year.

Wade Napier, diversified resources analyst at Avior Capital Markets, says Sappi “is very comfortable” in terms of its balance sheet. He says it has never fully repaid its debt because debt is a useful means of enhancing equity returns in a low global interest-rate environment.

By Mark Allix for Business Live

A petrol price hike of between 17 cents and 18 cents a litre is likely in May‚ according to the Automobile Association (AA).

Diesel and illuminating paraffin‚ however‚ are set for decreases of 11c to 12c a litre.

Commenting on unaudited mid-month data released by the Central Energy Fund (CEF)‚ the AA said on Monday that rising international oil prices were continuing to do battle with gains in the rand/dollar exchange rate.

“We are seeing a gradual‚ but sustained return of strength to petroleum prices‚” the AA says.

“On the international market‚ diesel and petrol prices have risen since late February‚” the Association explains.

“The appreciation of the rand against the US dollar has gone some way to offset this‚ meaning that diesel and illuminating paraffin are heading for reduced prices‚ while petrol is set to climb‚” it adds.

“Both the exchange rate and international oil prices continue to be volatile‚ and the month-end picture could be quite different from the current one‚” the AA says.

Source: www.bdlive.co.za

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