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Basic grocery basket up R100 since Feb - Massmart

| Economic factors

The price of a basic basket of 23 grocery items has risen by 13% since February this year, Massmart Holdings said at the announcement of its first-half results to June 26 2016.

According to an analyst presentation, a food basket containing items such as cordial, coffee creamer, pilchards, maize, salt, toilet paper, sugar, soap, spaghetti and rice now costs R100 more since February – up R874 from R774. 

Staples such as maize, sugar and peanut butter had among the highest increases. 

In such a subdued economic environment consumers delay purchases, trade down and reduce spending on durable goods to support spending on semi- and non-durables. 

In addition, customers search for value by cherry-picking promotions, buying in smaller quantities and choosing no name brand products. 

Massmart said weaker economic growth and the effect of a softer rand on import prices severely impacted consumer spending on durable goods. 

However, food and liquor sales growth accelerated in line with higher inflation, but also due to “effective trading and positive price-gaps to competitors”. 

“In a defensive economic environment, food acts as buffer from the pressure on our general merchandise and home improvement categories,” the company said. 

Statistics South Africa announced the consumer price index was 6% in July, down from 6.30% in June. 

Food and non-alcoholic beverages contributed 0.1 of a percentage point in July. The index rose by 0.5% month-on-month, mainly due to a 2.7% increase in sugar, sweets and desserts, a 1.1% gain in milk, eggs and cheese and a 0.8% surge in bread and cereals. 

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