Chicken Industry

Food price inflation shows need for VAT-free chicken

South Africa’s food price inflation, a key component of the consumer price index (CPI), remains stubbornly high, adding to the burdens faced by low-income households and the millions of unemployed.

World food prices have been dropping since March this year, but that has yet to reflect in South African consumer prices.

StatsSA reported this week that annual consumer price inflation was 7,6% in October 2022, up from 7,5% in September 2022. The consumer price index increased by 0,4% month-on-month in October 2022. 

The main contributors to the 7,6% annual inflation rate were food and non-alcoholic beverages; housing and utilities; transport; and miscellaneous goods and services, it said.

Food and non-alcoholic beverages increased by 12,0% year-on-year, and contributed 2,1 percentage points to the total CPI annual rate of 7,6%. Housing and utilities increased by 4,3% year-on-year, and contributed 1,1 percentage points.

Food inflation was not the highest increase registered in October. That went to transport (17.1%), and within the transport sector fuel was up 30% over the year and the cost of public transport had increased by 23.3%.

In the food sector, meat was up by 10.5%. Oils and fats rose by 25.7%. breads and cereals by 19.5% and processed foods by 15.3%.

Continuing food price inflation, and its impact on the poor, is yet another reminder that removing value added tax (VAT) from selected chicken portions would result in an immediate drop of 15% in the price of chicken for low-income households.

FairPlay has been calling for “VAT-free chicken” since 2018, because chicken is the country’s most popular and affordable source of meat protein.