Cooking oil, bread price increases may be the work of opportunistic retailers

As trade unions and South Africans continue to protest over the increased cost of living, the Competition Commission is investigating allegations that the country’s retailers are overcharging consumers on Sunflower oil and bread.

SA may be facing opportunistic price increase

Bread and oil prices

The commission says South African consumers may be facing opportunistic price increases of sunflower oil as processor prices have increased by far more than sunflower seed prices this year.

It says retailers have not passed on wholesale cost reductions for bread in the past resulting in widening retail margins.

“An increase in the wholesale-to-retail price of bread over time. Whilst this may be indicative of increases in the costs of retailers, the evidence suggests that cost decreases in the past have not been passed onto consumers by retailers and this is the source of margin growth.”

This comes at a time when there is widespread concern over food price inflation faced by already struggling consumers.

ALSO READ: Food basket prices up by over R500 in a year confirms cost-of-living crisis

Essential food pricing report

The findings are contained in the latest Essential Food Pricing Monitoring Report, released by the Commission on Wednesday.

To date, the Commission’s work in food price monitoring has revealed several concerns in South Africa’s food markets and food value chains.

These include wide farm-to-retail spread in prices, large price differences between regions for basic fresh produce, growing margins at the processor and retailer level.

It also includes the general trend of price inflation that started with the Covid-19 pandemic and has been exacerbated by supply chain constraints and the Eastern European conflict.

The Commission’s previous two reports had also noted that annual inflation in edible oils and fats was significantly higher than overall food inflation.

The commission says it will continue monitoring food prices going forward as the global food markets begin to normalise and ensure that any cost reductions are passed on through the value chain immediately.

“The commission has also initiated investigations into basic foodstuff value chains in order to act against any opportunistic behaviour given the levels of concentration in the value chain.”

On Wednesday, Statistics South Africa reported that consumer inflation had accelerated to 7.8% in July as unions took to the streets, to protest rising food prices.

ALSO READ: National shutdown: Cosatu members call for Ramaphosa to fall