Why is official food basket inflation rate higher than that of food retailers?

Why do food retailers have a lower inflation rate than the food basket? Are people buying down? What does it mean?

Stats SA calculates the food inflation rate based on the basket of food, as over 8%. Yet this week Pick 'n pay and Checkers reported food inflation rates calculated on their baskets at 2 and 3% respectively.

So if this is true, then where does that higher inflation figure come from?

Evan Walker, Analyst at 36one, helps us understand.

Its always a bit of a mystery to us as well. We know the retailers combine a basket, and within that basket is a number of variables, including potentially two to three hundred items. These items move around from year to year, some come in, some go out.

Evan Walker, Analyst at 36one

What we do know is that the consumer does trade down quite significantly during times of stresses like we see now.

Evan Walker, Analyst at 36one

What we do know is that the basket does comprise other things beside food. One big item in the basket is cellphone airtime which is quite deflationary.

Evan Walker, Analyst at 36one

One thing we know the retailers have done quite well over the past six months, is they have bought into these price increases.

Evan Walker, Analyst at 36one

Consumers during these times move for example, to changing brands to no names brands, as well as buying smaller pack sizes, and retailers struggle to measure this, and says walker this can cause distortions.

We see a lot of trading down both to a lower price point and to a smaller size package.

Evan Walker, Analyst at 36one

Walker says retailers year on year baskets are not fully disclosed. He says it is a politically sensitive issue for them to disclose.

But, he says, we are going to be paying much higher prices for food.

Read More
Great ideas, wrong time

Great ideas, wrong time

The iPhone, Ebay and Facebook, we all know these killer applications but what about their very similar predecessors that flopped.

Best bank ad ever? Andy Rice reviews Investec’s “you’re more than data”

Best bank ad ever? Andy Rice reviews Investec’s “you’re more than data”

The Money Show’s Bruce Whitfield interviews the advertising expert about the best and worst new advertisements.

Private school company Curro Holdings profits up 31%

Private school company Curro Holdings profits up 31%

The Money Show’s Bruce Whitfield interviews Curro Holdings CEO Andries Greyling.

Petrol price hike(s) and higher food prices are coming

Petrol price hike(s) and higher food prices are coming

The Money Show’s Bruce Whitfield interviews Personal Finance Journalist Maya Fischer-French.

Save 20% on groceries (buying together is power!)

Save 20% on groceries (buying together is power!)

Struggling to make ends meet? Bruce Whitfield interviews Nokwethu Khojane, cofounder of group buying company Lakheni.

Is the qualification real? Check out this ingenious, real-time verification tool

Is the qualification real? Check out this ingenious, real-time verification tool

The Money Show’s Bruce Whitfield interviews Logan Attorneys Consumer Law Specialist Stephen Logan.

Popular articles
Best bank ad ever? Andy Rice reviews Investec’s “you’re more than data”

Best bank ad ever? Andy Rice reviews Investec’s “you’re more than data”

The Money Show’s Bruce Whitfield interviews the advertising expert about the best and worst new advertisements.

Police apparently mulling over warrant of arrest after Grace Mugabe a no-show

Police apparently mulling over warrant of arrest after Grace Mugabe a no-show

EWN understands that lawyers representing the Zimbabwean first lady are negotiating with officers at the Sandton police station.

[LISTEN] 20-year-old SA woman traumatised by Grace Mugabe's assault

[LISTEN] 20-year-old SA woman traumatised by Grace Mugabe's assault

Gabriella Engels says she is saddened by people who are calling her names on Twitter before they understand the full story.

Traffic gridlocked as Imizamo yethu residents make their way to Cape Town

Traffic gridlocked as Imizamo yethu residents make their way to Cape Town

About 40 minibus taxis, in a convoy at a very low speed, are transporting Imizamo Yethu residents into CT for a planned protest.

Words you’ll hear: Grace Mugabe's latest nickname

Words you’ll hear: Grace Mugabe's latest nickname

Find out why Zimbabwe's First Lady should be dubbed with the moniker 'extension cord'.

Discovery CEO (and founder) Adrian Gore bares his soul about money

Discovery CEO (and founder) Adrian Gore bares his soul about money

The Money Show’s Bruce Whitfield interviews Gore about his attitude to money (hopes and fears, successes and failures, etc.).

Ocean Basket gives franchise owner the chop after assault video

Ocean Basket gives franchise owner the chop after assault video

The man was immediately divested of his shares and is no longer part of the group, explains Ocean Basket CEO Grace Harding.

WATCH: Cape schoolkids 'starstruck' after Trevor Noah,  Charlize Theron drop by

WATCH: Cape schoolkids 'starstruck' after Trevor Noah, Charlize Theron drop by

Oaklands High principal Reza Patel says it was an extremely exciting experience for both the learners and staff. We can imagine!

CoCT explains new electricity tariffs

CoCT explains new electricity tariffs

Following residents concerns over new electricity tariffs and properties being re-evaluated, Johan van der Merwe provides clarity.