Fact check: How high are the chances that food prices will go up?

Fact check: How high are the chances that food prices will go up?

- The price of fuel is set to rise at midnight on Wednesday. Petrol will cost between 23 and 26 cents more per litre while diesel will rise by between 24 and 26 cents per litre

- Consumers also face an increase in the cost of electricity and water

- These input factors mean the cost of food is likely to rise as producers pass on the additional costs to manufacture and transport goods to the consumer

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Cash-strapped South Africans have been warned to brace for a raft of price increases on fuel, electricity, water and even food which is putting a severe strain on the budgets of already strained South African consumers.

Motorists (and anyone who uses public transport) are bracing for another shocking fuel price increase which takes effect at midnight on Wednesday. The price of petrol is set to rise by between 23 and 26 cents per litre while diesel will also increase by between 24 and 26 cents per litre.

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What many consumers tend not to realise is the price of diesel almost directly affects the price of all goods in shops across the country. Food and almost every item in every shop in the country are delivered by trucks which use diesel.

The cost of producing food is also directly linked to the diesel price as most farm equipment used in the fields are diesel powered. Other parts of food manufacturing rely on electricity and municipal water, both of which are set for increases in July.

Briefly.co.za gathered that while producers and transporters can cope with small increases in input prices (fuel, electricity, water, labour etc.) the recent spike is likely to be passed on to consumers in order for these companies to remain economically viable.

So the short answer is this: the chances of food prices increasing in the coming months is very high.

Thesouthafrican.com reported that recent research suggests that potatoes cost on average of 31% more than they did last year, eggs cost around 23% more than the same time last year. Onions have increased by a shocking 109%.

The same research points out that the average price of a low-income food basket in South Africa is likely to rise by 5% in the coming months.

This rise is attributed to a rise in input costs such as electricity, a rise in delivery costs due to the increased diesel price and the much-criticised new VAT rate.

The same research group found that on average food prices rose by 7% from September 2017 to June 2018.

The news is likely to anger South African motorists after the recent news that the Road Accident Fund (RAF) which receives at least R1.93 of every litre of fuel purchased in South Africa is spending R1,666 per month per office chair.

The AA has called on President Cyril Ramaphosa to reconsider the fuel levy percentage and to consider lowering the amount in order to help strained consumers and provide some relief to all sectors of the economy.

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Source: Briefly.co.za

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