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South Africa’s major JSE-listed food retailers are continuing to play a part in trying to shield already compromised consumers from spiking food costs by keeping internal food inflation levels low.
Shoprite Group, Pick n Pay and Woolworths, in trading updates released on Tuesday, reported maintaining internal selling price movements below the recorded consumer price index (CPI) food inflation rate, which came in at 8,6 percent for June.
For Pick n Pay, internal selling price inflation for the 18-week period ended 3 July was maintained at 5 percent in its South African operations.
Competitor Woolworths says it managed to keep its price movement steady at 3,5 percent and its underlying product inflation at 3,9 percent for the 52 weeks ended 26 June.
Africa’s largest food retailer Shoprite reported maintaining internal selling price inflation for the 52-week period ended 3 July at 3,9 percent, despite seeing an acceleration in the fourth quarter that saw inflation in the second half of the period nearing 5 percent.
The consumer in South Africa has in the last few months had to battle increasing price pressures fuelled largely by Russia’s ongoing invasion of Ukraine, which sparked a global rise in fuel prices and supply chain disruptions.
Sasfin equity analyst Alec Abraham warns that should the inflationary environment continue on its current trajectory, the country’s grocers may lose the ability to shield the consumer from future price shocks.
“The longer these elevated prices go on, the more difficult it becomes for both the retailer and the producer. At some point, if the high inflation goes on for a prolonged period, you are going to start to see more of the price increases being pushed to customers.”
In the meantime, Abraham says that to feel the retailer’s pricing protection, consumers are going to have to start paying greater attention to their baskets by making cheaper, more affordable choices.
As he says, retailers are offering much of the price value in bulk products – which give customers greater value per kilogram – and in-house brands, which retailers often buy at a cheaper negotiated cost from producers. – Moneyweb
Online Reporter