Tag: food

It costs R4 500 to feed a household in SA

By Vernon Pillay for IOL

The April 2022 Household Affordability Index, which tracks food price data from 44 supermarkets and 30 butcheries, in Johannesburg, Durban, Cape Town, Pietermaritzburg and Springbok, shows that in April 2022 the average cost of the Household Food Basket is R4 542.93.

Food baskets increased in all areas tracked:

  • The Joburg basket increased by R65.86 (1,5%), and R242.49 (5,6%) year-on-year, to R4 563.09 in April 2022
  • The Durban basket increased by R138,27 (3,1%) and R409.21 (9,8%) year-on-year, to R4 583.05 in April 2022
  • The Cape Town basket increased by R75.90 (1,7%) and R308.67 (7,5%) year-on-year, to R4 430.42 in April 2022
  • The Springbok basket increased by R225.37 (4,8%) and R449.46 (10%) year-on-year, to R4 960.01 in April 2022
  • The Maritzburg basket increased by R98.31 (2,3%) and R449.65 (11,6%) year-on-year, to R4 335.83 in April 2022

35/44 foods in the basket increased in price.

The significant increases (5% and above) are: cooking oil, potatoes, beef, fish, spinach, cabbage, green pepper, tinned pilchards, bananas, polony, and apricot jam. Increases, also including maize meal, cake flour, rice, white sugar, samp, eggs, milk, frozen chicken portions, margarine, peanut butter, bread; and curry powder, stock cubes.

The cost of the household food basket continues to rise. Factors (global and local) impacting on the plate include the war in the Ukraine, the high brent crude oil price, the high fuel price, and a weak exchange rate. Much higher production and logistical costs will continue to drive prices upwards and are likely to continue rising for the rest of 2022. The recent flooding in KwaZulu-Natal (not accounted for in this April data – prices collected before the rains) will add to these increases going forward.

Statistics South Africa’s latest Consumer Price Index for March 2022 shows that Headline inflation was 5,9%, and for the lowest expenditure quintiles 1-3, it is 6,7%, 6,4% and 5,7% respectively. CPI Food inflation was 6,6%.

Responses by retailers

At the retail level, supermarkets have responded by rounding on the higher food prices by bringing in a lot of new cheaper brands, offering shop brands, offering specials (some unbelievable), offering ‘combos’ (maize meal, rice, flour, sugar, oil; potatoes, onions, carrots etc.), offering store cards, according to the study.

The index goes on to say that, most families now only buy the basic of the most basic foods. There is nothing to cut back. There is no behavioural change to make. There is no space to manoeuvre on the family plate. The space that is left is on finding a cheaper priced food. This space is the domain of the retailers.

Household domestic and personal hygiene products

The April 2022 Household Domestic & Personal Hygiene Index shows an increase of R26.44 (3,5%) month-on-month, with the total average cost of the products being R785,84 in April 2022.

This is a big monthly jump in the index. Increases were across the board, and included: green bar soap (9%), washing powder (10%) and bath soap (5%); toilet paper, toothpaste, Vaseline, cream, Handy Andy, dishwashing liquid, deodorant, and sanitary pads. The escalation in price of green bar soap, in particular, has raised concern. This long bar of magic green soap can do almost anything related to cleaning of bodies, clothes, dishes, homes; and simply must be bought.

The cost of basic hygiene products is high. These products compete in the household purse with food. These products are essential for good health and hygiene. Not much notice is taken on how women find the money to buy these products, and yet these are essential for good health, and hygiene; but also, in having a sense of dignity, being able to function in society and being accepted.

Year-on-year the household domestic and personal hygiene products index increased by R68.07 (9,5%) bringing the total average cost of basic household domestic and personal hygiene products to R785.84.

Workers

The National Minimum Wage is R23,19 an hour and R185,52 for an 8-hour day. April 2022, with a short working-day month of 18 days, the maximum National Minimum Wage for a General Worker is R3 339.36.

Transport to work and back will cost a worker an average of R1 152.00. Electricity will cost a worker an average of R731.50. A basket of basic but nutritious food, for a family of 4 persons, will cost a worker R3 139.37. Together these three core expenses come to R5 022.28.

Because food is bought after monies for transport and electricity have been paid for or set aside, in April 2022, the index calculates that workers’ families will underspend on food by a minimum of 53,6% this month

The study goes on to add that the majority of South African workers do not earn enough money to cover their basic expenses each month.

It means that in a crisis, there is no savings buffer. The spikes in the food basket are not being absorbed by workers, because there is no extra money to pay for the higher prices. Instead, workers cut back further on their family’s basic consumption, get sick more often, are more stressed and distracted, are less productive; and have less money to spend, and spread in the broader economy.

 

Shoprite tackles waste with AI

Source: Shoprite

South Africa wastes up to 10.3 million tons of food each year – and this is a problem the Shoprite Group is tackling from multiple angles.

Food waste is not just a front to the hungry in a country where 2.5 million people experience hunger weekly. It also has significant environmental and economic implications. Food is wasted across the supply chain, from farm to fork. It is a complex issue, which is why Africa’s largest food retailer has adopted systematic and comprehensive plans to address it.

Stopping waste before it occurs

The best way to reduce food waste is to avoid it to begin with, according to Sanjeev Raghubir, the Shoprite Group’s Sustainability Manager.

“Our biggest efforts go into preventing food waste and losses before they occur,” he explains.

The Group does this by reviewing its ordering, replenishment and ranging processes, using data analytics to identify food waste hotspots. For example, by optimising the product range in its delis, the Group reduced food waste by 11% in that department.

Using Artificial Intelligence (AI) to fight food waste

“Shoprite has adopted various technologies to fight food waste,” continues Raghubir. The Group uses artificial intelligence and machine learning to predict sales at its stores. Replenishment orders are placed automatically, to ensure that stock is always available for customers while simultaneously reducing food waste.

Various parameters are considered by the AI model. “For example, a store close to the finish line of an annual sporting event will automatically be replenished with additional convenience meals for that single day of the year,” Raghubir says.

Salvaging and rescuing food is a popular process seeing increasing use abroad, and it’s another important piece in preventing food from being wasted. For example, blemished bananas can be used in a banana-bread recipe.

Donating food

Although the Group’s procedures and practices go a long way towards reducing surplus food, it does not eliminate it altogether. Surplus food, still fit for human consumption, remains and every day the Group donates more than 120 000 meals to over 450 charities to fight hunger and address food security.

In the past year, the Group donated surplus food valued at R138 million. It also facilitates the donation of surplus fruit and vegetables directly from farms to charities.

Creating circular economies with waste products

Not all surplus food is fit for human consumption, but the Group has a plan for this, too. Every week, Shoprite sends around 44 tons of food waste, mainly dried goods like pasta, cereals, and flour, to be converted to animal feed.

Regenerative and organic farmer Farmer Angus sources over 4 tons of fruit and vegetables (not fit for human consumption) from the Basson Distribution Centre in Cape Town each week. He feeds this to his pigs and supplies an artisanal charcuterie range back to Checkers, thereby creating another circular flow of resources and avoiding waste.

Even the 904 479 litres of used cooking oil recovered from Shoprite and Checkers delis last year, is not wasted. This oil is used for industrial applications, including the conversion to biodiesel.

Organic waste from stores and distribution centres is increasingly managed through on-site composters and off-site biodigesters. In its last financial year, the Group sent 236 tons of food waste to composting.

These measures are having a marked impact on food waste and the environment. The Group diverted 3,305 tons of food waste from landfills in the past year and saved 8,391 tCO2e.

The Shoprite Group is closely aligned with the United Nations’ Sustainable Development Goals, including the target to halve food waste at retail and consumer levels and reduce food losses along the food chain by 2030 – a goal it is now on track to achieve.

 

South Africans are becoming poorer, FNB warns

Source: Supermarket & Retailer 

FNB forecasts a considerable decrease in real household disposable income in 2022, with South Africans expected to have even less money available for discretionary spending in the coming months.

The group noted that disposable income growth would slow from 5.9% in 2021 to 2.1% this year, partly due to a higher inflation forecast and gradually rising interest rates this year – and in part due to higher income base effects in 2021.

Disposable income growth in 2022 could also be under pressure from a fragile employment situation, the bank said in a note on Wednesday (20 April).

“Last year’s resurgence in disposable income growth had much to do with a significant resurgence in income from investments following the 2020 dip and less to do with any meaningful employment growth. By the final quarter of 2021, total employment was still in a year-on-year decline to the tune of -3.2% and was still a massive -11.4% down on the fourth quarter of 2019.

“One positive to partly offset this employment negative has been an extension of the Social Relief of Distress Grant; a special relief grant started up during the Covid-19 lockdown period. But this grant can only go so far and will be hard-pressed to offset employment, inflation and interest rate hiking negatives.”

Inflation

Statistics South Africa reported that annual consumer price inflation quickened to 5.9% in March from 5.7% in February, placing it just below the upper limit (6%) of the South African Reserve Bank’s monetary policy target range.

Transport, housing and utilities, and food and non-alcoholic beverages were the most significant contributors, with transport contributing 2.1 percentage points to the annual rate.

“In the household financial data of the SARB, we had already seen consumer price inflation, as measured by the Private Consumption Expenditure (PCE) Deflator, accelerate from 1.9% year-on-year as at the final quarter of 2020 to 4.8% by the final quarter of 2021,” FNB said.

“This acceleration directly curbs real disposable income growth, eating away at an increased portion of the growth in nominal disposable income.”

From a low of 2% year-on-year in May 2021, the bank said that the 3.7 percentage points rise in CPI inflation by February 2022 has already taken a very significant bite out of disposable income.

“In addition, the onset of SARB interest rate hiking late in 2021, with three 25 basis points’ worth of hikes to date as a result of rising CPI inflation, takes an additional bite out of disposable income, with the Household Sector debt-service ratio likely to have risen in the first quarter of 2022 as a result.”

“Food price inflation had been troublesome in 2021 already, but a surge in global oil prices led to high domestic petrol price inflation (reflected in the CPI for transport) that was a major driver of the acceleration in overall CPI inflation.”

In more recent times, the Russian invasion of Ukraine, along with resultant boycotts and sanctions, has significantly increased risks of global and thus domestic food price inflation pressures, global energy price pressures, and broader global supply chain disruption pressures, FNB said.

“And even more recently, last week, the severe KZN floods not only caused major damage to peoples’ homes and property but also to businesses and transport, including disruptions to goods flows through Durban, SA’s biggest port. Any supply chain disruptions from this could threaten the inflation environment still further.”

Food, goods prices set to soar

Source: IOL

South African consumers have been warned to brace for even higher prices this year as global supply chain backlogs are showing no signs of easing and are likely to worsen for the rest of 2022.

This comes as the Food and Agriculture Organisation (FAO) on Friday said that world food prices jumped 12.6 percent in March to a new record high, largely driven by conflict-related export disruptions from the Russia-Ukraine war.

The UN agency’s food price index, which tracks the most globally traded food commodities, averaged 159.3 points in March, compared to an upwardly revised 141.4 points in February.

The war between Russia and Ukraine – two major exporters of wheat, maize, barley and sunflower oil via the Black Sea – caused turmoil in the food markets as supply for staple grains and edible oils stalled. According to the FAO, the biggest price increases were reported for cereals due to a surge in prices of wheat and coarse grains and vegetable oils, fuelled by reduced export supplies amid the ongoing conflict in the Black Sea region and an already tight global availability of wheat, sunflower, palm, soy and rapeseed oils.

The meat index was up 4.8 percent, also hitting an all-time high with pork prices rising the most on record since 1995 due to supply shortfalls in Western Europe and a surge in internal demand in light of the upcoming Easter holidays.

Dairy prices increased by 2.6 percent due to inadequate milk output in Western Europe and Oceania to meet global demand, while sugar rose 6.7 percent, reversing most of the previous three months’ decline. Cargo Compass, a South African freight, logistics and warehousing company that operates worldwide, on Friday said goods prices would also rise sharply in South Africa as supply chain bottlenecks were here to stay for 2022.

Chief executive Sebastiano Iorio said at the start of the year they were hopeful that trade bottlenecks would ease this year, but they seem to be getting even more severe. “Prices of consumer goods like electronics and clothing, including imported basic food products, are certainly going to keep rising,” Iorio said.

“Shortages will have a significant impact on an already fast rising inflation rate.”

Headline inflation in South Africa for 2022 has been forecast upward from 4.9 percent to 5.8 percent, primarily due to the higher food and fuel prices, triggering a tighter monetary policy.

Lorio said that it was not only supply shortages that presented a problem, but rapidly rising freight charges were adding to dramatic price rises in shipped goods.

He said freight rates of South Africa’s three biggest trading blocs – China, the US and the Eurozone – were rising rapidly between 33 and 40 percent over the past 2 years. Iorio said freight costs had risen sharply because of higher oil prices in part driven by the war in Ukraine, the synchronised reopening demand “shock” to global economies, trucker shortages in Europe and the closure of several Chinese ports due to the re-emergence of Covid-19.

“Two years ago, freight rates for a standard 12-metre container from China were $2 000 (R29 280) to transport via sea to South Africa.

“Today it costs $14 000, an increase of more than 500 percent,” he said. Investec chief economist Annabel Bishop said elevated inflation remained a concern for both real incomes and consumption this year, with food prices, and transport costs showing upwards pressure. Bishop said sharply rising prices negatively impacted consumer affordability and so economic demand and, therefore, economic growth. “Higher costs of non-durable goods, which are typically necessities, reduces spend on other items, in the absence of markedly higher real wages,” Bishop said.

“Food on its own has the largest weighting in the cost of living calculation in South Africa.

“Fiscal support has reduced the impact of potentially higher fuel prices, and retailers may limit basic bread and cereal price hikes, but households will face a higher inflation and interest rate environment this year compared to 2021, and likely even higher interest rates in 2023.”

 

Petrol drives food prices ahead of Christmas

Source: Supermarket & Retail

This week, the price of petrol increased to a record R19.54 by R1.21 a litre, an increase that will exacerbate the already high cost of food, analysts say.

“The recent fuel price does not bode well for the inflation profile in the short- to medium-forecast horizon, particularly food inflation. This is also exacerbated by the fact that there are other cost-push pressures, like fertiliser costs and electricity costs,” Kulani Siweya, Agri SA’s chief economist, told Business Insider SA.

He said the uptick in retail prices might come as a result of retailers charging more to account for the higher transportation and distribution costs that come with continued fuel hikes and other factors.

Paul Makube, a senior agriculture economist at FNB, said the higher fuel price will affect all agricultural produce but will mostly impact fresh produce and meat products given their sensitivity and frequency of distribution.

“Going into the festive season, we are expecting food prices to remain elevated as meat prices are expected to remain firm on strong demand that comes with the festive season as well as lower slaughter numbers and rising world prices as we have seen play out this year,” Siwela said.

He said that prices for chicken, which have also remained high due to strong global prices, may remain elevated.

Currently, meat prices are already being pushed up by high production costs and rising feed costs. Weaner calf prices are 13% higher than they were last year at this time.

A kilogram of class A beef averages around R53.46 and has increased 3.5% year-on-year, while class C beef has risen by 8% to R45.64. While lamb and mutton prices are generally lower than last year, they are still 11% over the three-year average for this time of the year.

Poultry prices have risen 22% since last year at the same time for fresh whole birds, while frozen chicken has risen over 15%.

On the vegetable front, butternuts are currently averaging R7,00 a kilogram, while cabbages cost R2.28 and onions, R2.72. Potatoes cost around R6,39 for a kilogram, while tomatoes are R8,13.

Other factors contributing to higher food prices include global food prices on the rise that are spilling over into the domestic market and electricity inflation, Siwela said.

The global shipping crisis has also caused financial constraints and, in some cases, delayed the arrival of critical input products such as pesticide and herbicide, which South Africa imports close to 80% of, Makube said.

“Internationally, the supply chain crisis impacted on the distribution of raw products to manufacturing plants. Manufacturing plants could not get the right ingredients on time due to the logistics and the supply chain crisis which we’ve been having,” he said.

Makube said an adequate supply of food expected for the festive season might be able to offset the impact of the fuel hike on the price of food.

 

More South Africans buying food on credit

By Neil Roets for Mail & Guardian

On 1 June, StatsSA announced that the country’s unemployment rate has continued to worsen, hitting the 32.6% mark for the first time since the study was launched in 2008. Among the youth, this figure is far worse, hovering around 46%. Brought on by the ravages of the pandemic where millions have lost their jobs or experienced pay cuts, the latest stats point to the ongoing crisis that is affecting us on micro and macro levels. Most notably, it’s the middle-class that has been the most affected, with a forecast from Transaction Capital stating that 34% are expected to fall out of this demographic band because of the previously employed having to switch to informal employment or take on short-term contracts.

With fewer consumers reporting earning wages of R22 000+ a month and more now receiving incomes of less than R8000 a month this trend is likely to continue. Among lower-income groups, those who earn the National Minimum Wage (R3 643.92) continue to experience extreme hardship; the cost of a Basic Nutritional Food Basket for a family of four costs R2919.47 leaving exactly R724.45 to cover everything else, putting them at significant risk of turning to debt to survive. Where can they go for help?

In response to this deteriorating personal finance landscape, government is considering introducing a Basic Income Grant. Aimed at those who are unemployed and aged between 19 and 59 its introduction follows the end of the Covid-19 Social Relief for Distress Grant of R350. Despite giving some short-term relief, the amount is far below the poverty line, which sits at about R561 a month. With a shortfall of a few hundred rands, many will have no other option but to seek support.

According to a recent Debt Rescue survey, this is most often in the form of help from family and friends (30%), savings (36%), selling assets (10%) or turning to expensive credit providers. To put the latter in perspective, PayCurve recently published its own survey, indicating that 80% of all South Africans make use of unsecured credit or payday loans. Both come at extraordinary costs given the interest incurred on the principal loan amount, especially if it comes from a loan shark that can charge between 50% and 112% in interest. This is completely unsustainable and puts South Africans in a dangerous place where debt is used to pay for debt — it is a deeply concerning and profoundly challenging situation.

Through whatever means additional funds are being procured, it has to cover a lot of expenses. Given the average Household Food Basket is R4 137.11 (Household Affordability Index) how are costs for electricity, water, transport, school fees and medical expenses covered, many of which have increased recently? Eskom’s 15% tariff hike is a case in point, as is the rising fuel price that has had a significant knock-on effect on everything that needs to be transported. We also saw South Africa’s inflation rate increase in March 2021 to 3.2%, and is something that will likely continue in the coming months, further affecting pricing and the end-user.

Credit providers are often the only “way out”. This is evidenced by the fact that, according to our April consumer data, 42% said that they had opened a store card to buy groceries. This is alarming and completely unsustainable; food is the one thing that should only be paid for in cash — sadly, it is not a new trend. In 2018 Debt Rescue reported on the same consumer behaviour as many turned to retailers to buy food on credit. Even though it was claimed that the funds were only granted to those who could afford it and would use it responsibly, the fact is many consumers are still using credit to buy their cornflakes and pay it off later.

Buying food on credit is symptomatic of a bigger problem. Consumers who have experienced a change in their financial standing, either through retrenchments or pay cuts, are in trouble and taking on more expensive debt is only going to make it worse. Often the only way out is to engage a debt counsellor who can work with them to get out of a devastating debt spiral.

The problems experienced by middle-class South Africans are evident in the responses to our April survey: nearly half (48%) buy meat and vegetables on deals, 18% have switched retailers and have opted for cheaper store brands (14%). A full 82% are also bargain-hunting. This is not surprising given that 89% said the cost of food and goods is significantly higher than 12 months ago.

This is simply untenable. Consumers who have been affected financially by the pandemic are battling and cannot make ends meet. With so many millions joining the ranks of the unemployed, there are only two options: credit or government grants. Both present a set of concerns and challenges, although the latter means more pressure on treasury’s coffers, which are already under siege from competing demands. Becoming reliant on government is not what we want or need. We need to find ways of re-stimulating the economy where small businesses are better enabled to hire, or hire back employees. According to the National Development Plan, small to medium sized enterprises (SMEs) are expected to account for 90% of all jobs by 2030. If this is the case, we have to find ways to help these businesses get back on their feet and grow so that they are in a position to employ again.

Depressingly, however, the end is not in sight, and we will likely see further bloodshed in the market. With one in 12 jobs lost, it is estimated that employment rates could take until 2025 to revert to pre-pandemic levels. What will happen between then and now is deeply worrying, not least as unscrupulous loan sharks swoop in on the most desperate in our society, offering financial “help” that will further bankrupt them and generations to come.

 

Source: Supermarket & Retailer

The price of foods in the supermarket trollies of families living on low incomes increased 7.8% (R250) between March and May 2020, the two months of lockdown so far.

The Pietermaritzburg Economic Justice and Dignity (PMBEJD) Household Food Basket survey for May said that lockdown restrictions had meant that children and workers had remained at home, so food ran out quicker, and women could no longer shop around for the cheapest prices, so women had to buy more core staple foods.

“Our research suggests families living on low incomes might be spending 30 percent (R973.93) more on food in May 2020, than they did two months ago,” PMBEJD director Mervyn Abrahams said in a statement yesterday.

The economic effects of the lockdown in South Africa on poor income families has been recognised by the government, with for instance, President Cyril Ramaphosa saying on Freedom Day “that for millions… this has been a month of misery, of breadwinners not working, of families struggling to survive and of children going to bed and waking up hungry.”

On Friday, the South African Food Sovereignty Campaign and the Cooperative and Policy Alternative Center (COPAC) inaugurated the National Food Crisis Forum (NFCF), which has as its aim the building of a partnership with government – which is operating its own food relief programmes – and the Solidarity Fund to address the food crisis in the country.

“Whilst our data is localised (the data is gleaned from shops in Pietermaritzburg most frequented by lower income earners), it is not unlikely that this picture is playing itself out in textured variations across South Africa,” said Abrahams.

He said their research found women, with no savings buffers, were taking on higher debt to absorb some part of the food shortfalls.

“Our findings…raise very serious questions regarding the adequacy of government’s interventions to help South Africans during the Covid-19 pandemic, particularly as financial shocks will continue even as the government moves to ease lockdown restrictions,” said Abrahams.

Over the period pre-lockdown (March 2) to May 4, the price of the PMBEJD Household Food Basket increased by R249.92 or 7.8 percent percent, taking the total cost to R3 470.92 in May. The year-on-year price increase was 13.8 percent.

Some staple food prices to have spiked over two months were rice (26 percent), cake flour (3 percent), white sugar (6 percent), sugar beans (18 percent), cooking oil (11 percent), white bread (15 percent), brown bread (14 percent), potatoes (8 percent), onions (58 percent), tomatoes (12 percent) spinach (13 percent) and cabbage (22 percent).

In Pietermaritzburg, women are typically buying more maize meal (the 25kg bag vs. 10kg), rice (the 25kg bag vs. 10kg bag), cooking oil (an extra 5L), flour (the 12,5kg bag vs. 10kg), potatoes (buying an extra 10kg) and cabbages (an extra 4 heads).

Social distancing in kombis and supermarkets had disrupted shopping procedures. Before Covid-19, women scouted around three to four supermarkets, and two to three butcheries to find the most affordable prices, including specials; and then bought the foods at the best prices.

Now, women were forced to shop in just one supermarket and one butchery.

In Pietermaritzburg, women typically drew on three main alternative money sources: omashonisa (loan sharks), spaza shop credit and cash loans, and stokvel savings and loans.

Source: Supermarket & Retailer

South Africans are truly struggling financially and are prioritising their monthly debt repayments as they battle to make ends meet.

This is according to Debt Rescue CEO, Neil Roets, who said that consumers typically prioritise debt repayments for their homes and cars as these are assets that they do not want to lose to repossession.

However, these repayments also usually have the highest instalment amounts, so keeping them up to date just adds to the financial burdens embattled consumers are already facing, he said.

Roets added that consumers are cutting down on a number of purchases to keep up on their expenses.

“We have seen a lot of belt-tightening happening over the past year, so consumers have started cutting down on many expenses,” he said.

“Most luxury expenses have been foregone, and purchases such as dining out and takeouts are no longer part of budgets, to keep up with debt repayments and put food on the table.

Consumers typically prioritise debt repayments for their homes and cars as these are assets that they do not want to lose to repossession.

However, these repayments also usually have the highest instalment amounts, so keeping them up to date just adds to the financial burdens embattled consumers are already facing, he said.

Roets added that consumers are cutting down on a number of purchases to keep up on their expenses.

“We have seen a lot of belt-tightening happening over the past year, so consumers have started cutting down on many expenses,” he said.

“Most luxury expenses have been foregone, and purchases such as dining out and takeouts are no longer part of budgets, to keep up with debt repayments and put food on the table.

“Many consumers are resorting to credit in the form of store cards, credit cards or payday loans to put food on the table.”

Roets said this was of great concern as it shows that South Africans are taking on debt to cover day-to-day expenses.

“Day-to-day expenses that consumers are taking debt for includes food, clothing, electricity and fuel for transport,” he said.

“But there are cases where people are taking up debt to repay other debt, or a new payday loan shortly after the previous one was repaid, placing them in an even larger debt spiral.”

By Deborah Williams for Retail Insight 

June 2019 UK retail sales have been the worst on record, with a 1.3% total basis decline, according to a report by the British Retail Consortium (BRC). June UK retail sales saw a 2.3% increase in 2018.

Covering the five weeks from 26 May to 29 June 2019, the report found that the decline brings the three month average into a decline of 0.1% and the 12 month average to an increase of 0.6%, the lowest since its records began in December 1995.

BRC chief executive Helen Dickinson OBE said: “June sales could not compete with last year’s scorching weather and World Cup, leading to the worst June on record. Sales of TVs, garden furniture and BBQs were all down, with fewer impulse purchases being made. Overall, the picture is bleak. Rising real wages have failed to translate into higher spending as ongoing Brexit uncertainty led consumers to put off non-essential purchases.

“Businesses and the public desperately need clarity on Britain’s future relationship with the EU. The continued risk of a No Deal Brexit is harming consumer confidence and forcing retailers to spend hundreds of millions of pounds putting in place mitigations – this represents time and resources that would be better spent improving customer experience and prices. It is vital that the next Prime Minister can find a solution that avoids a No Deal Brexit on 31st October, just before the busy Black Friday and Christmas periods.”

On a like-for-like basis, June UK retail sales decreased by 1.6% from June 2018. This is lower than the three month and 12 month averages of -0.4% and -0.1% respectively. The report stated that this represents the worst 12 month average since April 2012.

In-store sales of non-food items declined 4.3% on a total basis and 4.1% on a like-for-like basis, over the three months to June. This decline is lower than the 12 month total average decline of 2.8%.

Non-food UK retail sales declined by 2.1% on a total basis and 2% on a like-for-like basis, over the three-months to June. This is also lower than the 12 month total average decrease of 0.8%. The BRC said that this is the worst quarterly decline since February 2009.

KPMG UK head of retail Paul Martin says: “There are few places retailers can hide from the difficult trading conditions that have been hitting the industry for some time. June’s retail performance did little to ease that, with like-for-like sales falling 1.6% compared to last year.

“On the high street, consumers were eager to pull up a pew for the summer’s sporting events, with added interest in the furniture category. Otherwise, consumers largely turned a blind eye to offers in the physical retail space.”

Non-food online sales increased 4% in June 2019, against an increase of 8.5% in June 2018. The three month and 12 month average growths were 3.3% and 5% respectively. Non-food online penetration rate increased to 30.7% last month, from 28.5% in June 2018.

Martin adds: “With 4% online growth, shoppers were thankfully more engaged in this channel, making the most of the added convenience and continued aggressive pricing. Fashion performed particularly well thanks to end-of-season sales and upcoming holidays.

“Pressure on retailers continues to mount and is seemingly coming from all angles: economic, geo-political, environmental and behavioural. Consumer spend is only likely to fall further as things stand, and cost efficiency remains vital. The focus for most in the industry will be preservation and adaptation in order to see them through these tough times.”

Food sales experiences ‘above total average growth’ for June 2019 UK retail sales
Over the three months to June, food sales increased 2.4% on a total basis and 1.5% on a like-for-like basis – an increase above the 12 month total average growth of 2.2%.

IGD CEO Susan Barratt said: “A late start to the summer weather in June compared unfavourably with consistently drier and warmer conditions in 2018, so while year-on-year growth in food and grocery sales last month was small, it is still encouraging.

“If the recent pick up in temperatures is sustained, there’s hope for stronger figures in July. Shoppers feel slightly more positive at the moment, with the percentage expecting to become worse off financially in the year ahead falling from 32% in February to 27% today.”

Food prices set to rise during 2019

By Dean Hutton for Bloomberg/Business Insider SA

Shoppers at Shoprite, Woolworths and Spar saw only small increases in food prices last year. But Shoprite is warning that prices could head higher in coming months.

Comparing prices at Shoprite and Checkers now, versus a year ago, there remains little evidence of price pressure.

Amid all the other pressures in the economy, food inflation has been the one relatively happy place the past year.

In its results this week, Shoprite reported that its prices only went up by 0.4% in the six months to end-December.

Woolworths said its food prices only increased by 1.2% in the same period, while Spar food price rose by only 1.4% – and the retailer says prices continue to fall across a wide range of grocery and perishable items.

In December, some 10,719 items in Shoprite and Checkers stores were cheaper than a year before.

The most notable price drops were among basic commodities such as frozen chicken portions, sunflower oil, rice, fat spreads and UHT milk across all our supermarket brands, a spokesperson told Business Insider SA.

However, the food price party could be drawing to a close.

In September last year, more than 11,600 items at Shoprite and Checkers were cheaper than a year ago, indicating that prices of almost 1,000 products have stabilised by December.

Shoprite itself is warning that prices will start to pick up. “The price of maize meal has already started increasing, which in turn will impact the cost of chicken feed,” the spokesperson said.

At the height of South Africa’s extreme drought in 2016, the white maize price reached R5,000 a tonne – which pushed up food inflation to more than 7%. However, following good rains in many parts of the country, the maize price fell to below R2,000 a tonne. Of late, however, the maize price is back around R3,000 amid renewed drought concerns.

“(Also), the price of sugar has traditionally over the past years increased in the first quarter of the year and we expect this increase to still be implemented,” Shoprite said. “Other categories to be affected will depend on factors such as inflated supplier prices, exchange rates, etc.”

Comparing prices at Shoprite and Checkers now, versus a year ago, there is little evidence of price pressures, however.

For now, the price of Huletts white sugar (2.5kg) remains unchanged at R34.99 from a year ago, at Shoprite.

The price of Ace Super Maize Meal (10kg) has actually fallen to R48.99, from a year ago (R52.88). A coffee brand like Frisco (750g) is also cheaper now (R54.99) than a year ago (R59.99). At Checkers, prices were also largely in line with twelve months ago, with some products like Sir Fruit juice falling from R29.99 to R25.99

The only big increase we could find was in sunflower oil, with the Helios brand (5 litre) up from R74.99 a year ago to R79.99

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