South Africans, already bombarded with soaring fuel and energy prices, are also having to cough up more for their monthly groceries with no relief in sight. Riots in Asia, Africa and the Middle East have dominated headlines and highlighted the critical state of world food supplies.

The UN Food and Agricultural Organisation released a study in December 2007 projecting a 49 percent increase in African cereal prices and 53 percent in European prices. Also at home, in April trade union Cosatu protested against high food and energy prices, demanding a reduction in the price of bread as a refund to customers for being overcharged following the bread price fixing scandal that hit the country in November 2007. They also asked for a zero value added tax rating on basic foods, as well as subsidies for the poor. South African annual food inflation jumped to double-digit rates, the highest in almost 10 years with total food inflation for 2007 averaging a whopping 10.4 percent, the highest since 2002.

Reserve Bank Governor Tito Mboweni said in a speech posted on the Reserve Bank's website; "Food accounts for more than 50 percent of the spending basket of the low-income group, compared to some 17 percent of the spending of the highest-income group, and some 20 percent of the overall CPI (Consumer Price Index) basket."

Consumers are forced to be more conscious of what they buy and to substitute their favourite brands with cheaper, 'no-name' options.

Main culprits in the food inflation pie

The main culprits in the food inflation pie are the effects of climate change, growing demand from countries such as India and China and use of crops to produce biofuels but the biggest contributor is soaring oil and energy prices. Last week the price of oil soared to an all time high of $139.32 while predictions for local petrol price increases next month varies between 70 and 74c/l for petrol and between 58c and 62c/l for diesel.

South Africans are begging for a breather while Governor Mboweni states the central bank's mission as solely to curb inflation hence the 450-basis-point interest rate hikes, with another one potentially on the cards for August.

A relieve in the price of petrol will mean a decrease in food prices. Many business leaders, including Pick 'n Pay Chairperson Raymond Ackerman, have asked for the petrol industry to be deregulated in the hope that competitive forces would succeed in lowering prices.

"The whole Western world is deregulated on petrol and it really would bring the price down but of course it would affect a lot of the smaller garages, I understand that and that is often a criticism, but you know, in free competition, if you start protecting a group of people at the expense of the consumer, who is more important?" Ackerman asked during a radio 702 interview.

But government shot this idea down, noting that South Africa was a small player in the market — and dependent largely on imports of fuel — the Department of Minerals and Energy Affairs had looked at other countries which deregulated its fuel. "Initially the price went down, yes, but unfortunately the price crept up again," the Chief Director of Hydrocarbons, Nhlanhla Gumede said.

He said the option also had been proposed that South Africa should subsidise fuel, but nations like Saudi Arabia and Venezuela could do so because they were large oil producers.

In this uncertain climate, South Africans are at the mercy of global headwinds and a trigger-happy central bank that many believe is out of touch with the hardships faced by the man on the street.


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