Retail sales of R593 billion are driven by rising food prices, not consumption patterns

Retail sales of R593 billion are driven by rising food prices, not consumption patterns

Rising food prices – in contrast to growth in organic consumption – are driving growth in South Africa’s fast-moving consumer goods (FMCG) sector, according to the NielsenIQ (NIQ) Retail State of Affairs report, which reveals sharp rises in cooking oil prices are affecting consumption patterns. This would be a good thing, if it weren’t for the price hike and instead the switch to healthy eating.

The consumer goods sector, now worth R593 billion in annual sales (to end March 2023), has grown by 13.4% over the past twelve months. This includes both groceries and alcoholic beverages.

Steve Randall, Commercial Lead for Consumer Panel at NIQ South Africa, says CPI is often “overrepresented and sometimes misunderstood” when making a robust analysis of the true impact of rising food prices.

“Overall, the CPI is currently holding at 6.3% (down from 6.8% the previous month) and as a result, people are saying it is cooling down, but food inflation is still much higher at 12.2% and it only started to return to normal in April. / May this year.

“Stats SA’s food inflation number has wide market recognition and is a useful measure, but it can only look realistically at a subset of items and monitor prices at a given time.”

Food prices It rose 14.4% year-on-year in March – the highest rate of food price inflation since March 2009. Food is the largest component of the CPI, accounting for more than 15% of the basket.

past months Index of household affordability in Pietermaritzburg On an annual basis, the cost of a basic food basket of 44 items, for a family of seven, increased by R555.41 (10% increase) from R5,571.54 in June 2022 to R6,126.95 in June 2023.

NIQ has market information at the barcode level, scanned in 10,000 modern supermarkets, from about 100,000 FMCG products, which provides researchers with a rich data set.

“We use data at the item level to calculate inflation and look at items sold last year and this year. Because of the accuracy of the detail we provide, we use a normally weighted basket (not a statistically weighted basket), which results in a more accurate display.”

Over the past 12 months, NIQ research revealed that the sharp rise in cooking oil prices has affected consumption patterns.

Increase cooking oil by 40% During this period, it is the largest contributor to overall net inflation in consumer goods, contributing 7.2% to inflation, although it accounts for less than 2% of total sales.

Rising oil prices have affected consumer consumption patterns: quantities purchased have fallen steadily over the past three quarters, indicating that consumers are using less of this product (or perhaps changing cooking patterns). This, in turn, extended to the purchase of frozen chicken, which caused the price of chicken cooked in oil to skyrocket.

Randall says consumers are also turning to a protein alternative to chicken, such as pork and canned protein.

Meale meal is up 17.6% year over year, while rice inflation is up just 1%. Meanwhile, coffee prices increased by 15.5% due to reduced promotion and higher daily prices. DM


Source by [author_name]

Leave a Comment