'Price hike plunging households into poverty'

from the Independent On Line

By Arthi Sanpath

Consumer groups and unions are calling for government intervention in the spiralling costs of basic foods, fuel and electricity, and have warned the increases are plunging households further into poverty.

The call comes after local bakeries confirmed on Wednesday that the price of bread would increase in January, barely a month after the last price increase.

The price of milk and other dairy products is also set to increase soon by as much as 7 percent. Meat prices have been rising steadily since late 2007.

Households are having to budget for an increase in the petrol price, which is expected to rise to as much as R8 a litre, and an expected increase in electricity tariffs by 14,2 percent in April.

Consumer groups and unions say they view the increases in a serious light and will call for investigations into pricing systems.

Etienne Terre'Blanche, the Milk Producers' Organisation's (MPO) managing director, said milk and dairy products were expected to become more expensive in the near future. The MPO represents 87 percent of milk producers.

"The price increase is inevitable and we expect it to be anything from between 5 and 7 percent by the end of 2008. Farmers' input costs, such as fuel and grain, are increasing drastically. We are investigating prices being charged by feed-grain companies as we feel these are excessive," he said.

Terre'Blanche said the MPO was concerned about consumers, who had borne the brunt of price increases over the past six months, and he indicated that the MPO had taken supermarkets that were charging extra for dairy products to task.

"Supermarkets have many rebate systems in place and instead of passing savings on to consumers, they make a large profit. Take for example a R10 litre of milk: the farmer gets at most R3. We need to know where the rest of the money goes.

"We have approached the Competition Commission to intervene so that there is a more transparent pricing system, so consumers will know what they are paying for," said Terre'Blanche.

Also taking up the cudgels in the fight for consumer rights is Cosatu.

Union spokesperson Patrick Craven said they wanted an investigation into rising costs.

"We have called for a broader investigation into the possibility of price fixing after Tiger Brands was found guilty of fixing the price of bread; this could be a problem with other essential food items. When it comes to negotiating wages next year, we will consider the increases that affect the living standards of our members," said Craven.

The National Consumer Union called on the government to back farmers and subsidise basic products.

"It is always worrying when basic food prices keep going up, especially basic items like maize, bread and milk," said spokesperson Ina Wilken.

"For far too long farmers in South Africa have not been paid for their products according to what consumers are paying at the end of the chain. Sadly, far too many people cannot afford basic items."

She said that for many years, the union had questioned "add-ons" to the petrol price, as this commodity impacted on the price of other items.

One organisation that says government doesn't seem to be listening to pleas for interventions on price increases is the National Consumer Forum (NCF).

"We have for the past two years called for intervention from relevant government departments, but it seems no one wants to listen," said NCF chairman Thami Bolani.

He said the forum had noticed a price increase trend over the past year and said the solution was in empowering small businesses and encouraging them to produce staple food items.

"In this way, price increases can be curtailed by small businesses challenging their larger retail competitors by offering local items at a reasonable price," said Bolani.