Despite VAT exemption, some zero-rated food prices increased in past 12 months

Despite being exempt from VAT, the prices of some zero-rated foods increased by 4.1% over the past 12 months.

The latest Household Affordability Index, compiled by the Pietermaritzburg Economic Justice & Dignity Group (PMBEJD), found zero-rated foods in the household food basket increased by R113.66 (4.1%) from R2,775.45 to R2,889.11 in the year to June.

The index tracks, monthly, the prices of 44 basic foods from 47 supermarkets and 32 butcheries across the country.

Basic food items such as brown bread, rice, samp, mealie rice, vegetables and fruit are zero-rated for VAT to make them more affordable for consumers. In May, certain offal and tinned or canned vegetables were added to the list.

According to the report:

• In June 2024, 30kg of maize meal cost R301.28, while it cost R351.60 a year later;
• A 5kg bag of samp rose from R62.11 to R73.14;
• Five litres of cooking oil went up from R149.75 to R158.65;
• Six cans of pilchards increased from R151.15 to R154.28; and
• Twenty-five loaves of brown bread rose from R378.66 to R381.01.

The report states that foods subject to VAT increased by R76.70 (3.1%), from R2,477.32 to R2,554.02.

“Twenty-two of the 44 foods in the total household food basket are subject to VAT. Foods subject to VAT make up 47% of the total cost of the household food basket. VAT on the total household food basket came to R333.13 in June,” the report says.

Mervyn Abrahams of PMBEJD said that in June families living on low-incomes may underspend on basic nutritional food by a minimum of 18%.

Of the 44 foods tracked in the basket, 19 foods increased in price. Foods that increased in price by 5% or more include onions (9%) and beef (5%).

“Households living on low incomes change their purchasing patterns in response to changes in affordability conditions,” Abrahams said.

“On low incomes, women buy the core staple foods first so that their families do not go hungry and for basic meals to be prepared. Where the money remaining is short, women have no choice but to drop foods from their trolleys or reduce the volumes of nutritionally rich foods in their trolleys.”

This had negative consequences for health, wellbeing and nutrition, he said.

“As financial and economic circumstances worsen, so too does household health and nutrition. The gap between what women are able to buy and what they need to buy for proper nutrition widens.”

TimesLIVE