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South African families can anticipate a hike in grocery bills as the latest fuel levy increase is set to inflate food costs nationwide.
According to Thabile Nkunjana, senior economist at the national agricultural marketing council, the agricultural sector, which is a significant user of fuel, will be severely impacted.
The sector’s high mechanisation means that increased fuel costs will lead to higher production costs, which will inevitably be passed on to consumers.
“When fuel prices go up, so do the production costs, and those costs are inevitably passed on to the consumer,” Nkunjana said per Business Tech.
The use of fuel in food processing, collection, and logistics, make every stage of the value chain more expensive.
“Every stage in the value chain depends on fuel, and when that cost increases, the final product becomes more expensive,” he added.
Lower-income and rural households, who already spend a large portion of their income on food and transport, will be disproportionately affected.
With South Africa relying heavily on imported agricultural inputs, the risk of reduced production grows. The combined impact of fuel and electricity price hikes could lead to a severe cost squeeze on producers, threatening food security and the economy.
According to Nkunjana, a co-ordinated effort between government and the private sector will be required to mitigate the effects and shield farmers and consumers from further shocks.
“If we don’t act now, the consequences will be felt not only on supermarket shelves, but throughout our entire economy.”
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