Retailers prefer welfare to price control

The Congress of South African Trade Unions (Cosatu) has called for the government to fix the price of basic food items as interest rates and fuel and electricity hikes take their toll on the working class.

Cosatu is to march today in Cape Town, Durban and Newcastle to protest against the electricity tariff increases. The price of electricity is set to rise by an average 27,5% this month.

Spokesman Patrick Craven said Cosatu did not want the working class and the poor to subsidise the government's failure to plan electricity production adequately. He said consumers should not have to pay the increased tariffs.

Next week, Cosatu will march in Mpumalanga, Free State and Northern Cape. On 23 July, it will march in Gauteng, Eastern Cape, North West and Limpopo.

Cosatu sought a measure of protection for the very poor, and was not against regulation by the government of staples, Craven said. The option of the government fixing the prices of basic food items should be investigated.

Cosatu wanted land reform to be speeded up so food production would increase. Craven said SA should not be at the mercy of international markets when it came to price increases.

Pick n Pay CEO Nick Badminton said there was a need for a government strategy to look at the “soaring fuel price”. “It is highly unlikely for food inflation to be contained unless the fuel price increases are somehow controlled.”

While retailers such as Pick n Pay were delaying price increases, further temporary relief would be achieved through increasing the list of goods that were VAT-free. “Bringing down the price on basic goods will ease inflation, and increase affordability.”

Badminton said a government food subsidy would “go a long way” to make basic food more available to the poor.

Massmart spokesman Brian Leroni said the group would rather see government using social intervention such as grants than market interventions as the group was “pro” free market.

Spar CEO Wayne Hook said price controls were not a long term solution as they could interfere with production of food items if farming, for example, was not profitable. But there was a “real problem that must be addressed”.

Source: Business Day

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