SAFTU ON UNJUSTIFIABLY HIGH RETAIL PRICES ON ESSENTIAL FOOD ITEMS

The South African Federation of Trade Unions strongly condemns retailers that keep essential food items’ prices high despite declining input costs. In its recently released Essential Food Price Monitoring Report, the Competition Commission revealed that input costs of essential food items have declined, yet their retail prices remain unjustifiably high. Put differently, the retail prices do not reflect the decline in input prices, which were said to have been responsible for the retail price increases.

The Commission’s report further stated that the cost pressures on food inputs have eased, but retailers are not passing on these prices to essential food items. Moreover, the purported main contributors to the increase in input costs have all eased: the rand is stronger, there has not been load shedding in over six months, and fuel costs have come down significantly. Yet despite this, retail prices for essential food items remain high.

Retail prices of maize, brown bread, and tinned fish are on the rise. While farmgate prices for wheat have come down, the producer price of brown bread has increased. Further, the producer price of cooking oil has dropped significantly, but this cost reduction is not reflected in the retail prices.

The Commission further highlighted what it called “the rocket and the feather”—that is, prices are quick to go up but slow to come down, which suggests that retailers are exploiting the spread between input costs and retail prices to rake in profit.Retailers exploit the spread between input prices and retail prices, which is witnessed in their profit margins. South African retailers have higher profit margins than their international counterparts—upwards of 6% to 8% higher.

The profitability of the South African retailers, extracted from the working class both as workers through low wages and as consumers through high retail prices, is reflected in the exorbitant earnings of the retail executives.

Just Share’s recent report in September of 2024 showed the earnings gap between an average retail worker and the top executives of South Africa’s major retailers. The report revealed that Woolworths’ CEO earns R123 million annually – a staggering 1,308 times the lowest-earning worker. Closely second is Shoprite CEO, who earns R65 million per annum – 1000 times more than the lowest earning worker. Followed by Spar Group CEO at R25 million, 416 times the lowest earning worker.

Food Insecurity

In its recent report, the Pietermaritzburg Economic Justice and Dignity Group( PMEJDG) demonstrated that minimum wage earners cannot afford the food basket. It further pointed out that the cost of the food basket has increased by 50% since September 2020. The food basket contains food items without which the working class simply cannot survive.

In October 2020, a worker on a minimum wage of R3653.76 a month would have been short of R262.96. Now, the same worker earns R4633. 76 and has a shortfall of R696.86. This is only with respect to the cost of the food basket alone. It does not factor in transport costs, the ever-rising electricity costs, rent, and so on.

47% of South Africa’s population relies on social grants – of whom 18 million are on permanent grants, while 10 million are on Social Relief of Distress Grant of R370. And 14 of the food items reliant on by the grant recipients increased by R24, while the whole grant system saw an increase of a measly R10. 23. Between September 2023 and September 2024, the household food basket increased by 1,9% from R5155.77 to R5225.68. These are people whose meagre state-provided incomes the retailers are now fleecing with absolute impunity.South African retailers shamelessly engage in unscrupulous pricing methods in a country with 30% of the population living in poverty and in a country with 12.2 million of its population unemployed – 10 million of whom are on R370 SRD grants.

An all-out attack on the living standards of the working class

The working class is under siege – its living standards are assailed from all directions. At the point of production, the working class is assailed through precarious and insecure working conditions on pitiful wages, while as consumers, it is at the mercy of giant retailers whose lust for profits knows no bounds. Moreover, in addition to low wages and high retail prices on essential food items, there is a generalised attack on the social wage through the government’s budget cuts administered by the National treasury.

The South African government, consistent with the neoliberal dogma to which it is fully committed, is bent on budget cuts in social spending areas as crucial as health and education. This is a furtherance of the attacks on the social wage and, thus, on the well-being of the working class. These cruel cuts are administered in a country in which the majority of the country’s population relies on public services. In health, for instance, over 84% of the public relies on public health care.State-owned entities, whose role ought to be to power the country’s developmental aspirations, are on course to be sold to the private sector, and their services will be rendered at profits to the majority of the poor working class.

The working class has only one option: to organise itself against the coordinated, systematic, and determined attacks of the capitalist class and the state that serves it.

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