Despite a cooling in some agricultural commodity prices, the benefits are not reaching South African consumers as retail margins expand and electricity costs hit record highs.
The Competition Commission’s latest cost-of-living report has revealed that while some farm-gate prices are easing, a combination of slow retail price adjustments and rising electricity costs continues to impact the affordability of essential staples.
Presented by Andiswa Sibhukwana, economist at the Competition Commission, the report warned that sticky retail prices and escalating administered costs are entrenching high food costs.
The inquiry focused on essential staples, including maize meal, cooking oil, eggs, and poultry, investigating how price shocks are transmitted from the farm gate to the dinner table.
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‘Rocket and feather’ pricing
One of the primary concerns raised in the report is the lack of downward price transparency at the retail level. The commission identified a “rocket and feather” pricing pattern, where retail prices rise quickly when producer costs increase but fall slowly when those costs drop.
“Expanding margins can reflect opportunistic ‘rocket and feather’ pricing behaviour by processors and retailers taking advantage of movements in the cost of commodities and processed products,” Sibhukwana noted.
Siyabulela Makunga, spokesperson at the Competition Commission, said the commission is “doing what it is mandated to do to protect the consumers against any exploitation and excessive pricing”.
The report specifically pointed to the egg industry as a case study. While producer prices for eggs fell steadily in the latter half of 2025, retail prices remained high, leading to concerning spreads that suggest consumers are not benefiting from lower farm-gate prices.
Similar trends were observed in the pricing of IQF chicken pieces and canned pilchards, where retail price hikes outpaced producer price movements.
Electricity and household costs
Beyond retail dynamics, the report identifies electricity as a major hurdle for the agricultural sector. Electricity prices have risen by approximately 85% over the last five years, significantly outstripping the general inflation rate of 30%.
The report highlighted that agriculture is particularly vulnerable to these hikes due to the energy required for irrigation, cold storage, and food processing.
Raksha Darji, senior economist at the Competition Commission and co-author of the report, said, “The reality is that the cost of living is very high, and the poorest households will face the effect of this significantly.”
This statistical effect translates into a heavy psychological burden for those on the ground.
Boipelo Tladi, a consumer feeling the daily pinch at the till, says the constant financial juggling is taking a toll beyond just the wallet.
“The state of our current economy is affecting our mental health because things are super expensive and the money is less. It’s like working just to meet basic needs and nothing else,” Tladi said.
This emphasises the commission’s findings that low-income households must dedicate nearly 67% of their total spending to cover food and housing.
The report further warned that a R54 billion undercalculation by Nersa is expected to result in an additional 18% electricity price increase over the next two years.
The commission argued that these high costs for essential services limit the gains in household welfare and slow down the recovery of the broader agricultural economy.
To address these challenges, the report called for greater scrutiny of how prices are set for essential services and food staples. The commission emphasised that the “cost-plus” model currently used in the electricity value chain may be preventing price relief even when supply improves.
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