By Philippa Larkin for IOL
Pick n Pay will cap its gross profit margin for ginger and garlic, which is good news for cash-strapped consumers, following recent public complaints that fingered seven retailers for price gouging.
South Africans are struggling to afford basic foodstuffs amid rising prices.
The move follows public complaints against seven retailers about the rising cost of these items. Picture: Brendan Magaar, ANA.
In recent months, the Competition Commission has received a number of complaints from members of the public alleging that certain Food Lover’s, Spar, Shoprite Checkers and Pick n Pay stores had increased prices of ginger and garlic.
The Competition Commission said yesterday it was pleased to announce the signing of a memorandum of agreement with Pick n Pay last week – the first retailer to do so – and it hoped to formalise similar agreements with other national retailers.
“This confirms that the company has capped its gross profit margin for ginger and garlic essential food items for the period covering January 28, 2021 to April 1, 2021, which may be extended. Pick n Pay has also instructed its franchises to price no higher than the corporate store price on ginger and garlic,” it said.
The commission said it had engaged with all the affected retailers, and expressed its concerns that the alleged significant price increases of ginger and garlic in certain retail outlets could result in a contravention of Consumer Protection Regulations and other relevant provisions of the Competition Act. In terms of the Consumer Protection Regulations, ginger and garlic fall under the category of “basic food and consumer items”.
It said although the wholesale prices for these products had increased due to heightened consumer demand during the second wave of infections, the commission was of the view that this did not warrant the large increase in absolute margins seen in some instances.
The Pietermaritzburg Economic Justice and Dignity research group published its Household Affordability Index for January 2021, which showed that the cost of a basic food basket had increased drastically.
The index showed that the price of maize meal and other maize products continued to increase, with basic and core food items such as sugar beans, rice, flour and bread seeing hikes of between 31 percent and 68 percent.
It said the cost of a basic food basket in January was R4 051.20, which was way above the monthly minimum wage.