Consumer to bear the brunt again

IT LOOKS as if consumers are getting ripped off on food prices, Economists.co.za chief economist Mike Schussler told the National Consumer Forum in Midrand on Friday.

IT LOOKS as if consumers are getting ripped off on food prices, Economists.co.za chief economist Mike Schussler told the National Consumer Forum in Midrand on Friday.

Schussler said food prices were still increasing at about 10 percent at consumer level. He said the investigation into bread prices by the competition authorities was a positive move.

"When the farmer puts his price down at the gate he sometimes gets paid a lot and sometimes less but he has risks," Schussler said.

"And then this factory adds value - but we hardly ever see decreases - and it keeps very high profit margins. When it leaves the factory gate we see another profit margin. I think we are getting to a similar situation in food prices as municipalities but I don't have all the information," he said.

Schussler also spoke strongly about how consumers are getting fleeced on electricity prices as industry and internationals pay below cost but consumer charges have quadrupled.

Municipality profit margins on sales of electricity and water are also not far off 100 percent on average, his research showed, but an increase of 34 percent, which again will hit mainly residences, is being sought.

The government, through Justice Minister Jeff Radebe and the Department of Trade and Industry, spoke at the forum, which zoomed in on placing consumer issues on the national agenda.

Schussler said while South Africa was likely to have experienced the deepest decline since 1966 when the current down cycle is finished, the worst might have passed.

"The economy does move in cycles and I think we are on our way back. From 2010 things will be better. I t won't be brilliant but better." - Net Bridge

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