'Don't expect dramatic food price decrease'

[daveza]

http://www.iol.co.za/index.php?set_id=1&click_id=13&art_id=vn20090111102912607C428359

While consumers spent about 23 percent more for a basket of basic foods over Christmas, the South African National Consumer Union hopes to see "meaningful" price decreases in coming weeks, reflecting dropping fuel costs.

But analysts have said this assumption is overly simplistic.

"Consumers will be watching to see a reduction in the fuel price reflected in almost every food item, and they will shop around and vote with their feet."

But some analysts have said it is too simplistic to expect food prices to clearly reflect dropping fuel prices amid an unpredictable and severe global economic downturn. Many consumers should guard their extra funds amid job security worries and increasing debt.

According to Iraj Abedian, chief economist at Pan African Capital, three factors kept food prices high, despite decreasing fuel costs:


Time: "It takes time for a drop in the petrol price to be built into the industrial cost structures," he said. And he said Middle East fuel prices were already going up again because of fighting in Gaza.

It doesn't seem to take time for a raise in the petrol price to be built into the cost structures.

Food supplies did not match rising demand.


Price-fixing and collusion and "we don't really have a competitive food supply chain structure in this country".

So now we are accepting price-fixing as a norm ?

Moolman, however, applauded the Competitions Commission, which was "doing an excellent job of getting to the nitty gritty where there is price fixing".

But she was concerned that the R45 million fine served on Foodcorp and the R100m paid by Tiger Brands, both guilty of price fixing, would be passed on to consumers.

"With the company losing and shareholders losing, the consumer might be losing at the end of the day, but we hope it will not happen."

I don't understand the last bit ?

 

[Sparky_za]

Well basically what they are saying is even though they were guilty of price fixing and fined, they are just going to keep prices where they are, or even raise them to make up the lost profit.

 

[Mephisto_Helix]

yep, it's more of the "Oh they fined us did they, well, time to raise the prices to recoup our losses from the consumer"

What also gets me is that they all say that unfortunately, due to the rising petrol prices, food is going up and there's nothing they can do, blah blah .... but when the fuel price drops drastically, they turn around and say that due to the high labour cost (they even say that the fuel price only plays a small part actually), they can't lower food prices ......... greedy, lying, twist-those-words, swines is what they are

 

[Turbo_Aspiration]

Capitalism - the best worst system we have

 

[supersunbird]

yep, it's more of the "Oh they fined us did they, well, time to raise the prices to recoup our losses from the consumer"

What also gets me is that they all say that unfortunately, due to the rising petrol prices, food is going up and there's nothing they can do, blah blah .... but when the fuel price drops drastically, they turn around and say that due to the high labour cost (they even say that the fuel price only plays a small part actually), they can't lower food prices ......... greedy, lying, twist-those-words, swines is what they are

I hope you don't expect a inflation adjusted increase from your employers this year. It would force them to keep their products priced higher and we cannot have that can we?

 

[Sparky_za]

I hope you don't expect a inflation adjusted increase from your employers this year. It would force them to keep their products priced higher and we cannot have that can we?

...lol... problem is they will probably get less than inflation increase, prices will stay high, and company will pocket the difference.

 

[Mephisto_Helix]

I hope you don't expect a inflation adjusted increase from your employers this year. It would force them to keep their products priced higher and we cannot have that can we?

you have me at a loss as to what you're trying to say

 

[supersunbird]

you have me at a loss as to what you're trying to say

You are employed perhaps? So now you're company knows you will maybe expect a inflation adjusted salary increase (10 to 12% probably) this year. So now all their employees expect the same, thus they need to calculate that into their budget for all other 500 employees too. The money must come from somewhere. Ths is part of the issue that causes prices stickyness.

Or will you be happy with no increase?

 

[Mephisto_Helix]

Oh, I work for myself ..... but not many companies do give raises in line with inflation anyway. But are you justifying the greedy food companies

 

[supersunbird]

Oh, I work for myself ..... but not many companies do give raises in line with inflation anyway. But are you justifying the greedy food companies

Maybe they should just all go DIAF and then you can life off the land? Please tell me how you would run them.

 

[Mephisto_Helix]

I'm not qualified to give a toss as to how to run them but how is it that food, a staple, anywhere else in the world, isn't out of reach of all the people? There is a difference between rightly making a profit as a company and just greedily fleecing (not to mention price collusion) people because you can

 

[daveza]

Any offers on why prices can immediately be raised but not immediately reduced ?

 

[DJ...]

Any offers on why prices can immediately be raised but not immediately reduced ?

Because fuel prices were not the only rising input costs in the retail sector when prices were pushed up. In fact most companies hedge against rising fuel costs (but still push up prices to a small extent which I have a bitch about). The other important factors were food shortages at the time, a decrease in sales due to the global financial crisis, decreasing investor confidence in the retail sector, investors pulling out of SA completely, PPI inflation driven input cost increases (their suppliers also bumped prices) etc. The sky-rocketing oil price was but one factor in their cost chain and whether we like it or not, we pay for market volatility...

 

[diesel]

Any offers on why prices can immediately be raised but not immediately reduced ?

Farmers planted crops last year before the fuel price decrease.

 

[zeb]

Farmers planted crops last year before the fuel price decrease.

Didn't they also plant the year before the fuel price increase? Why did we not get the benefit then?

 

[supersunbird]

Didn't they also plant the year before the fuel price increase? Why did we not get the benefit then?

How do you know we didn't? Have you included the factors of that the fuel price was already higher than it is now in 2007 (cant recall exactly, but I think it was)and lots of crop yeild went into this biofuel nonsense?

 

[Frankie]

Fuel levy 'will hike food prices'

Don't expect a food price decrease when the fuel price decrease's, but there will most certainly be a food price increase in line with any fuel price increase.

Fuel levy 'will hike food prices'

Johannesburg - The higher fuel levy will have an adverse impact on consumers and business alike, says Bill Lacey, a consultant for the South African Chamber of Commerce and Industry.

Motorists, who have only recently started to feel the benefits of the markedly lower crude oil price, can expect the fuel levy on petrol to increase by 23c to R1.50/l and that of diesel by 24c to R1.35/l on April 1 this year.

Lacey expects the fuel levy to push up food prices. "The fact of the matter is that we are a very transport-dependent country and anything that impacts on transport - and obviously fuel - is going to be felt by everybody," he says.

 

[metalcore]

F.u.c.k. the greedy companies because they raise prices as soon as the fuel goes up and then come with b.u.l.l.s.h.i.t lies when the fuel prices drops. Im sick of the greed in SA.

A lot of people from overseas say to me our market is like the most consumer screwed market they have seen. Just look at how the banks here are doing better because of the way they been milking us. LOL

 

[daveza]

They screw us because we let them screw us.

Simple as that.

We are an apathetic nation who just put up with what we get and sometimes come butt-naked with a large pot of KY in hand.

If you dare to make a fuss about anything you are labelled as a difficult person and a troublemaker. And so it will remain until we change our game.

 

[supersunbird]

F.u.c.k. the greedy companies because they raise prices as soon as the fuel goes up and then come with b.u.l.l.s.h.i.t lies when the fuel prices drops. Im sick of the greed in SA.

A lot of people from overseas say to me our market is like the most consumer screwed market they have seen. Just look at how the banks here are doing better because of the way they been milking us. LOL

Well, the companies need to pay their employees and other bills and turn a profit. Are you an employee? Should they pay you less so your company can charge less for its products? Why don't you buy some shares then you can coin it from those companies screwing the consumer? Maybe buy some shares in those banks and get nice dividents...