Rising Food Prices

March 1, 2023 Mary

South Africa’s almost record level food price inflation, load shedding, rising energy costs, and further fuel and interest rate hike forecast have eroded workers’ disposable incomes and further disadvantaging the poor – leaving analysts predicting that the country was at heightened risk, including civil unrest.

Head of Policy Analysis at the Centre for Risk Analysis, Chris Hattingh, cautioned that the lower fuel price, which the latest Statistics SA data showed last week, had largely contributed to driving annual consumer inflation down from 7,2 percent in December 2022 to 6,9 percent in January, could prove to be only a temporary reprieve. The fuel price index declined by 10.5 percent between December 2022 and January, the data showed.

United Trade Union of SA (UASA) spokesperson Abigail Moyo said the state’s failure to supply food producers and retailers with sufficient water and electricity to run businesses efficiently had fuelled inflation that eroded workers’ disposable income.

“Economically driven financial stress through no fault of their own has been a factor in workers’ lives for years. With items such as maize meal going up 36,5 percent since January last year, onions up 48.7 percent, samp up 29.6 percent, and instant coffee up 26.4 percent, it is clear that difficult times are not nearly over for households,” she said.

Business Leadership South Africa chief executive Busisiwe Mavuso also warned that unless there were “meaningful and targeted interventions,” the country could face an Arab Spring-type revolt.

Hattingh added: “This inflation relief afforded by the lower fuel price could prove to be temporary. The reopening of the Chinese economy will likely drive international oil prices higher, impacting down the line in the form of higher fuel prices. South Africa is also more exposed to imported inflation. Should the costs and prices of manufactured and consumer goods and inputs increase, this will then drive inflation higher locally.”

“Of great concern regarding pressure on consumers is that the food and non-alcoholic beverages inflation rate was recorded at 13.4 percent (annually) in January. The previous time this reading was so high was April 2009, at 13.6 percent,” he said.

Additionally, the category of bread and cereals recorded the biggest increase of any product group at 21.8 percent, while meat inflation rose from 9.7 percent in December 2022 to 11.2 percent in January.

“A fundamental weakness in the economy – unreliable electricity supply – could likely push prices and inflation higher throughout the year. This will result in more pressure on consumers and businesses and add to the potential for civil unrest,” he said.

He said load shedding was now a priced-in “feature of South African life,” as shown by the Rand weakening to R19 against the US Dollar.

Annual inflation, at 6.9 percent, was also outside the South African Reserve Bank’s (SARB) target range of 3 – 6 percent.

“With the latest data for January now in, the SARB could continue its rate hiking cycle with another 25 basis points increase at the next meeting of the Monetary Policy Committee,” Hattingh said.

Independent crime and policing expert and a former senior researcher at the Institute for Security Studies, Dr Johan Burger, warned that signs of potential unrest due to the rising cost of living and disillusionment were visible across the country.

He said most households in the middle and higher income brackets had been forced to cut back on spending due to higher interest rates and the rising prices of basic foods.

“Those of us with a relatively stable income are already finding it increasingly difficult and have to think twice before we buy something, so one can only imagine the pressure people in lower income groups must be feeling,” he said.

“For many, this has been the situation for many years, and it has become worse. Unemployment is at 32,9 percent, and the unofficial unemployment rate is even higher. High levels of unemployment lead to high levels of poverty, creating all sorts of social problems,” he said.

Burger said during the looting in July 2021, much of what was stolen was foodstuffs and goods that could be sold for cash.

“In some cases, people who went out to shop for food were attacked and robbed of their food. Other instances that we see now are when a truck breaks down on the road near a community, and all of a sudden, a flood of people come in and strip it of whatever it’s carrying – whether food or something they can exchange for food,” he said.

Burger said these incidents showed a “general instability” against the backdrop of a weakened criminal justice system that cannot deal effectively with criminals.

“The potential for large-scale disruptions and looting and for large groups of people to come together and engage in popular uprisings could happen. When large groups of people are exposed to extreme levels of property over a long period of time, they build resentment and feel neglected by the state. They feel their needs are not acknowledged, and with this resentment comes a disregard for the state, its laws, and the police, and they feel they have the right to rise up and take what they need,” Burger said.

“And if they rise up in large enough numbers, it will be very difficult for the state to suppress this kind of uprising. The potential for this to happen is very real – it’s almost visible; it’s just beneath the surface,” he said.

Burger said all that was needed to spark unrest was a potential trigger, as had occurred in KwaZulu-Natal with a pro (former president Jacob Zuma campaign ahead of the July 2021 riots.

“The danger is it could spread very quickly because those levels of poverty and deprivation exist in almost all our communities across the nation. In 2008 the Xenophobic riots spread in a question of days, and we saw 69 people killed and many more injured and displaced,” he said.

He warned that localized protests about service delivery had been occurring for years, and if left unattended, these could also get to a point where “resistance will explode.”

“It is growing dissatisfaction with their situation, and many of poor communities see themselves as the neglected part of South Africa. They have not shared in anything promised when democracy came in terms of employment and service, and they go hungry once this happens; there is a division between a part of our population and the institutions that govern us, which is why there is real potential for large scale insurrection,” Burger said.

Head of the Justice and Violence Prevention Programme at the Institute for Security Studies, Gareth Newham, said rising food security and hunger, with around 60 percent of the population now living in poverty and a large proportion of households facing hunger weekly, created a high level of despair and frustration.

“This challenge has been around some time, and increasing food prices could make that worse,” he said.

However, he said the current causes of most public violence were labor-related disputes and service delivery failures.

“We historically don’t have an issue where food insecurity has been a major driver of public violence, but it doesn’t mean it won’t be. There could arguably be a level of hunger that does lead to it,” he said.

IPS UN Bureau Report