Guiding consumers since 2009

Give us our daily bread

By Staff Writer

Inflation has been falling this year after soaring causing the policy of inflation targeting via interest rates to cool credit spending and bring our economy into a safer zone. Inflation has been falling which means that stuff should not be getting as expensive as quickly as it was before. Inflation is measured by a basket of goods and some goods are still increasing at rates above headline inflation. Food comes to mind. There is a long period for  food costs from planting time until retail many months later, but why are food costs still not coming down?

 

  • Competition issues being investigated
  • Bread price fixing cartels fined
  • Supermarkets next on the list

 

Last year while inflation was still running really high farmers were having to pay more to plant and bring their crops to production and this lead to food price inflation being passed on. Even though headline inflation has been falling as a whole, its components have different rates of inflation. Food is such a big part of what we buy that it has a major effect on inflation and without these costs being passed through headline inflation could be even lower than the 8% it is at the moment. The competition commission is investigating the supermarket sector to see if there has been anything dodgy going on.

The competition commission has been flexing its muscles and seems determined to put a stop to the classic South African business culture which is one of jobs for friends and family, and milking it until it is dry. The supermarkets of course deny any wrong doing and even welcome the enquiry. The thing is in a radically altered financial environment like the one we find ourselves inthe old ways of doing things are not going to be able to survive. The National Credit Act was the signal that things were changing and so far it has stood us in good stead, now it is time for the gloves to come off and for our regulatory authorities to ensure that we don't have to live on just bread alone.

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