Food prices soar unabated and out of touch government is not responding
18 October 2023
Statistics South Africa (StatsSA) has reported headline inflation at 5.4%. While marginally below the South African Reserve Bank's (SARB) 6% upper target limit, this should not be mistaken for a sign of economic resilience.
A marginal dip below the upper range doesn't erase the government-induced cost-of-living crisis that has driven food prices steadily upward and wiped food off the tables of the most vulnerable South African households. Our economy remains in serious trouble with no sign of growth in sight.
Beneath the headline figure, today’s numbers paint a grim picture of the devastating imprint of soaring food prices far above headline CPI.
General food prices have seen a staggering 8.2% hike while staple food items like bread and vegetables surged by 9.3% and 15.2% within the year. The crisis is more pronounced in rural areas and among lower-income households.
Lower-income South African households disproportionately shoulder the consequences of Government’s lack of foresight and hesitance to implement the necessary fiscal measures to combat the escalating cost-of-living crisis. For the poorest 60% of South African households, the annual rise in living costs supersedes headline inflation. With already half of their income earmarked for food, these households are exceptionally vulnerable to inflationary pressures.
While the Cabinet had, months ago, mandated the Economic Cluster to develop an action plan to curb food prices and enhance food security and accessibility, no tangible plan has been presented.
At the same time the DA has been proactive, and we have presented viable measures to lower food prices.
Contrary to Finance Minister Enoch Godongwana's hint of a potential VAT hike, which would further inflate prices, it is imperative that the Minister give due consideration to the DA’s proposals in the forthcoming Medium Term Budget Policy Statement (MTBPS). These include:
- Increasing solar tax rebates to free consumers from Eskom's stranglehold;
- Reducing the tax on fuel; and
- Broadening the zero-VAT rated food basket to encompass essentials such as bone-in chicken, beef, tinned beans, wheat flour, margarine, peanut butter, baby food, tea, coffee, and soup powder.
The inflation figures underscore the need for immediate and decisive government action to counter the mounting cost of living crisis. South Africans are calling for concrete change, and the DA stands firm in our resolve to see tax proposals implemented to alleviate their hardship.
The DA will present a memorandum to the Minister of Finance next Friday and will present our alternative MTBPS on 30 October 2023.
Issued by Dion George, DA Shadow Minister of Finance, 18 October 2023
