Competition Commission flags retailers for slow food price reductions despite lower producer costs
This is referred to as a 'rocket and feather' phenomenon, which illustrates how prices tend to rise quickly when costs increase but fall slowly when costs decrease.
Picture: Eyewitness News
Lester Kiewit interviews Siya Makunga, Spokesperson for the Competition Commission.
Listen below.
The Competition Commission has expressed concerns over retailers' reluctance to pass on price reductions, especially for essential items like eggs and cooking oil.
Despite a decrease in producer costs, retail prices remain elevated, raising suspicions that retailers may be exploiting wider profit margins.
In its latest Essential Food Price Monitoring Report, the commission emphasised that while food inflation has slowed, consumers – particularly low-income households – continue to struggle with affordability.
Makunga refers to this as a 'rocket and feather' phenomenon, which illustrates how prices tend to rise quickly when costs increase but fall slowly when costs decrease.
For instance, despite factors like no loadshedding and lower fuel prices, item prices often remain unchanged.
"We are quite worried that the prices remain high, despite seeing the easing of input costs and this is happening at a rate that is not affordable."
- Siya Makunga, Spokesperson – Competition Commission
Makunga says their current priority is to understand the reasons behind the slow pace of price reductions.
To achieve this, they are gathering information from all parts of the value chain, he adds.
Scroll up to the audio player to listen to the interview.