Expensive festive season in store

South Africans will be spending more this Christmas, but getting less.

While retailers are expecting consumers to spend more on festive fare they will, in reality, be spending on credit and, due to spiralling prices, receiving less for their money.

A Bureau for Economic Research and Ernst and Young Festive Season Retail Trends Survey showed that tills were already ringing with sales at the start of the festive season and that volumes are predicted to be five to seven percent higher than last year. The latest National Agricultural Marketing Council Food Price survey shows prices are accelerating at 10 percent year on year.

“The survey results suggest that retailers in non-durable goods, semi-durable goods and durable goods all recorded solid volume growth compared to the fourth quarter of 2010,” Derek Engelbrecht, Retail and Consumer Products Sector leader at Ernst and Young said.

“Boosted by rising selling prices and stronger than anticipated retail volume growth, the confidence levels of retailers rebounded during the fourth quarter of 2011. The percentage of retailersreporting that they are satisfied with prevailing business conditions improved from 48 to 56 during the fourth quarter of 2011,” Engelbrecht said.

According to the NAMC report, food inflation is rising at 10 percent, with the biggest price drivers being oils and fats (22.6 percent), sugar (14.9 percent), meat (14.6 percent) and vegetables (11.8 percent).

“It is likely that not all inflationary pressures have been passed on the chain yet, and as the festive season is drawing nearer, processors and retailers are probably hoping to pass on some of their higher costs.

“Although meat prices generally increase during this period of the year, it is likely that the rate of increase in pork and chicken meat prices could outpace the rate of increase in beef and lamb prices,” NAMC said.

SA Poultry Association CEO Kevin Lovell said consumers should brace themselves for higher chicken prices as farmers, due to rising input costs, were “having a difficult time”. “We do expect some|increases over the December period both for cost reasons and also for demand reasons.”

International credit insurer Coface South Africa said it did not expect to see a fall in retail sales this festive season.

“We are expecting a marginal increase compared to last year. During the last few festive periods there have been small single digit percentage increases each year. Generally, festive season retail sales represent about 20 percent of annual sales. This indicates how important the festive period is for retailers,” Coface senior manager Natasha Hardy said.

Pick n Pay CEO Nick Badminton said the next three weeks would be the busiest time. “While we have seen caution being exercised by consumers for most of this year, December has started extremely well and we are encouraged by the trend, which augurs well for the whole trading period,” Badminton said.

National Consumer Forum chairman Thami Bolani said: “People are going to spend but not like in previous years because many people are experiencing financial constraints.” - Independent on Saturday