With a VAT hike to 15% on the horizon, South African consumers will be keeping an eye on the prices of the favourite brands, while retailers continue to market themselves as the best option for tightening budgets.

In a recent 702 radio interview regarding its latest financial results, Shoprite CEO Pieter Engelbrecht claimed that the group’s chains were known to be the cheapest.

Consumer price watchdog and comparison site, Retail Price Watch, has tested this claim by looking at the average price of a basket of 10 national brands (brands stocked by all stores) across Shoprite, Checkers (both members of the Shoprite Group), Pick n Pay, Spar and Makro, in stores around the country.

The website also tracked price changes of those brands between February 2017 and February 2018 to see how these prices have changed over the past 12 months.

Makro’s basket is some margin the cheapest at R176, R17 below that of Shoprite and Checkers, which came in joint second at R194, with Spar’s basket costing R201 and Pick
n Pay’s R203.

In 2017 Makro was also the cheapest by R17, with Pick n Pay and Shoprite and Checkers all within R3 of each other.

“Consumers should make up their own minds as to whether this small basket is representative of the whole. At the very least it means they should be circumspect while shopping and not believe all retailers’ claims,” said Viccy Baker of Retail Price Watch.

“Interestingly, although Shoprite is supposed to be selling to lower-middle income consumers and Checkers to high-end consumers (‘We are chasing the same consumers as Woolworths’), there was less than 50c difference in the price of their baskets.”

Baker noted that Shoprite has subsidised the pricing for many basic foods, including 600g brown bread at R4.99 a loaf, R2 hotdogs and R4.99 hot chips in some stores – which were also mentioned by Engelbrecht, who said that the group was selling ‘sub–R5 deli meals’.

However, she said that consumers in the chain’s target market could do with having more nutritious basic foodstuffs such as eggs or frozen chicken, subsidised as well.

VAT hike

South African consumers are set to feel the pinch in the coming months as a new VAT rate is set to kick in from 1 April.

In the latest budget speech for 2018, the finance ministry announced that the 14% VAT would be lifted to 15%, to raise as much as R22 billion to plug a massive hole in the national budget.

Meanwhile, the basket of zero-rated items (which are not charged VAT) has not changed, despite calls from political parties and civil groups for the basket to be expanded, so that the country’s most vulnerable are not hit as hard.

The VAT hike will not simple impact the shelf price of items, but will affect the entire value chain.