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Food and Fuel Prices Will Be 2008’s Driving Forces

by 5m Editor
7 January 2008, at 11:43am

SOUTH AFRICA - Consumers shouldn’t expect any financial relief soonThe New Year will be tough for the South African economy and economists say there is no end in sight to high food and fuel prices.

A group of economists surveyed by The Times unanimously agreed that consumers would not be getting relief in their pockets any time soon.

People are advised to be extra careful this year when spending as they will start to feel the pinch from escalating food and petrol prices, high interest rates and the effects of the National Credit Act.

FOOD INFLATION

Andre Joost, an economist at the Agricultural Marketing Council, said he didn’t expect a significant drop in food prices this year.

He said: “We don’t think food prices will increase at the same level as they did last year, but the pressure in the food basket will still be there.

The main reason is a high global demand for wheat products, which will put upward pressure on local food prices, he said.

Grains, biofuel production and demand for protein feed are the other factors that have sent food prices skyrocketing.

Joost said the production of meat, especially poultry and pork, needed a lot of grain.

“We should see a relaxation in demand for luxury agricultural products such as fruit and red meat,” said Joost.

Relief is in sight for red meat lovers from February until April. Prices of beef and mutton saw a 6percent increase in 2007. Food price increases were further exacerbated by the drought that hit South Africa last year, said Sizwe Nxedlana, an economist at Standard Bank.

Dawie Rood, chief economist at the Efficient Group, said meat and poultry prices were likely to go up in the short term , but we could expect to see the price of vegetables coming down in the same period.

Source: The Times

5m Editor