As South Africa prepares for the unveiling of the revamped Consumer Price Index (CPI) on Wednesday, there is growing concern about the increasing costs of staple food items, particularly for the nation’s most vulnerable communities.

The new basket reflects significant shifts that could have lasting implications for household budgets, especially in poorer areas.

According to early insights released by Joe de Beer, deputy director-general for economic statistics in the Department of Planning, Monitoring and Evaluation, cereal products such as maize meal, white and brown bread, and white rice show the most considerable increase by weight.

Expenditure on these essential food items has risen from 17.1% to 18.2% of total expenditures. While a 1.1% shift may seem minor, the nuanced impacts can be transformative for families already grappling with tight budgets.

The critical highlight from this assessment is the notable increase in maize meal — from 3% to 4.1% — with similar rises seen for brown and white bread and white rice, all surpassing half a percent. These are fundamental staples for many, particularly in poorer communities where such items constitute a significant portion of their diets.

Conversely, the index suggests troubling trends in dairy products, with a drop in consumption of milk and eggs, whose weights decreased from 2.5% to 1.8%. This reduction mirrors a worrying downsizing in dairy, which could exacerbate already fragile nutrition levels among poorer households.

The newly restructured basket of goods has seen additions of 71 new products and the removal of 53, making a total of 391 products in the index. Among the new entries are basmati rice, meat bones, and ready-made meals, reflecting changes in consumer preferences and lifestyles.

Meanwhile, classic items like ready-mix flour and flavoured milk have been removed — indicating a shift that underscores a need to adapt to current economic realities.

De Beer said said the new headline CPI will also come with the publication of additional tables that will include more details on these low level weights and different indices that go along with them.

“I can't share the CPI for next week but I can share that changes in the CPI are driven by changes in weights and not so much by the changes of the products in the basket. In most cases, changes in weights are relatively minimal. So, without getting into the prediction game, I don’t think there should be any concerns that there should be a way out number published,” he said.

“We have to ask which segment typically buys these products. It is more towards the poor communities that will buy so much of the maize meal, breads, cooking oils. And on the downsize, there has been a significant drop in dairy, which includes milk and eggs. The poor that buys bread and the cooking saw significant reduction in expenditure that includes eggs dropped from 2.5 percent to 1.8 percent in weights.”

In 2023, household consumption expenditure reached slightly above R143,000, while the average annual household income was around R204,000.

Strikingly, Black African-headed households accounted for 62.2% of total consumption, averaging R108,461. The Western Cape and Gauteng regions dominated the expenditure landscape, together making up 54.4% of total household consumption.

With the Western Cape showcasing the highest average annual expenditure at R229,636, stark disparities emerge when compared to the North West province, the least affluent, with an average spending of R98,147 per year.

As South Africa navigates these economic shifts, understanding the nuances of the CPI and its implications on food prices will be crucial in addressing food security and ensuring equitable access to essential goods for all citizens.

BUSINESS REPORT