|
Related Topics |
Category: Prices and inflation
Date: 20 February 2020
Date: 20 February 2020
|
In this article we take a look at the average price paid per kilogram of potatoes and sweet potatoes across the various provinces in South Africa, as well as take a look at the year on year growth rate of average potato and sweet potato prices
Note all data from Statistics South Africa |
|
So what is the average price per kilogram of potatoes across South Africa's provinces?
So lets start by taking a look at the average price per kilogram of potatoes first since more money is spent each month on potatoes than on sweet potatoes. Another reason why we will look at potatoes first is the fact that potatoes is in each province's CPI basket while sweet potatoes is only in 5 provinces's CPI basket. So how come potatoes are included in all provinces CPI baskets but sweet potatoes not. There is a dual rule when selecting products for inclusion, enough money has to be spent on an item and enough people have to buy the specific item. So potatoes passed this criteria in all provinces while sweet potatoes failed this criteria in a few provinces. Ok so enough with the technical stuff. Lets take a look at the average price per kilogram of potatoes per province for January 2020. The summary below shows the average price per kilogram of potatoes per provinces (ranked from the province that paid the most per kilogram of potatoes to the province that paid the least)
So those in the Northern Cape paid the most per kilogram of potatoes (R14.72) and their neighbors the Western Cape paid the least per kilogram of potatoes (R11.73). So during January 2020 citizens in the Northern Cape paid 25.5% more per kilogram of potatoes than those in the Western Cape. One wonders if there is any particular reason for the substantial difference in the average price of potatoes in the Western Cape compared to that of the other provinces? Is the mix of stores (large retail vs smaller corner stores etc) they collect prices from in the Western Cape very different to that of the other provinces? Or is the retail environment in the Western Cape just very different from the other provinces?
Taking a look at the year on year growth rate of the average price per kilogram of potatoes we find the following (sorted from province which showed the highest average price increase over the last 12 months to province that showed the lowest average price increase):
So the Western Cape saw a significant decline in the average price per kilogram of potatoes compared to all the other provinces, and this is the main reason for the fact that their average price per kilogram of potatoes is so much lower than any of the other provinces. The question is why did the Western Cape experience such sharp declines in potato prices? Were people in the Western Cape eating less potatoes and retailers dropped prices in order to reduce stock of it? Are those in the Western Cape swapping out potatoes for something like sweet potatoes? Lets see if sweet potato prices can shed some light on this.
- Northern Cape: R14.72
- Gauteng: R14.17
- Limpopo: R13.99
- Mpumalanga: R13.96
- Kwazulu-Natal: R13.69
- Free State: R13.41
- Eastern Cape: R13.34
- North West: R13.26
- Western Cape: R11.73
So those in the Northern Cape paid the most per kilogram of potatoes (R14.72) and their neighbors the Western Cape paid the least per kilogram of potatoes (R11.73). So during January 2020 citizens in the Northern Cape paid 25.5% more per kilogram of potatoes than those in the Western Cape. One wonders if there is any particular reason for the substantial difference in the average price of potatoes in the Western Cape compared to that of the other provinces? Is the mix of stores (large retail vs smaller corner stores etc) they collect prices from in the Western Cape very different to that of the other provinces? Or is the retail environment in the Western Cape just very different from the other provinces?
Taking a look at the year on year growth rate of the average price per kilogram of potatoes we find the following (sorted from province which showed the highest average price increase over the last 12 months to province that showed the lowest average price increase):
- Free State: 8.1%
- Northern Cape: 6.7%
- Kwazulu-Natal: 4.1%
- Gauteng: 3.6%
- Limpopo: 2.9%
- North West: 1.4%
- Mpumalanga: 0.1%
- Eastern Cape: -0.4%
- Western Cape: -14.3%
So the Western Cape saw a significant decline in the average price per kilogram of potatoes compared to all the other provinces, and this is the main reason for the fact that their average price per kilogram of potatoes is so much lower than any of the other provinces. The question is why did the Western Cape experience such sharp declines in potato prices? Were people in the Western Cape eating less potatoes and retailers dropped prices in order to reduce stock of it? Are those in the Western Cape swapping out potatoes for something like sweet potatoes? Lets see if sweet potato prices can shed some light on this.
Lets take a look at the average price per kilogram of potatoes per province for January 2020. The summary below shows the average price per kilogram of sweet potatoes per provinces (ranked from the province that paid the most per kilogram of potatoes to the province that paid the least)
So only 7 provinces has sweet potatoes in their provincial CPI baskets. Free State and North West do not have sweet potato in their provincial CPI basket, which means not enough money, or not enough people bought sweet potato in these provinces to warrant its inclusion in their provincial CPI baskets.
Taking a look at the year on year growth rate of the average price per kilogram of sweet potatoes we find the following (sorted from province which showed the highest average price increase over the last 12 months to province that showed the lowest average price increase):
- Eastern Cape: R21.70
- Gauteng: R20.43
- Western Cape: R19.85
- Northern Cape: R18.77
- Mpumalanga: R18.49
- Kwazulu-Natal: R18.15
- Limpopo: R17.79
So only 7 provinces has sweet potatoes in their provincial CPI baskets. Free State and North West do not have sweet potato in their provincial CPI basket, which means not enough money, or not enough people bought sweet potato in these provinces to warrant its inclusion in their provincial CPI baskets.
Taking a look at the year on year growth rate of the average price per kilogram of sweet potatoes we find the following (sorted from province which showed the highest average price increase over the last 12 months to province that showed the lowest average price increase):
- Gauteng: 0.0%
- Mpumalanga: -4.3%
- Limpopo: -5.0%
- Eastern Cape: -5.0%
- Northern Cape: -11.7%
- Kwazulu-Natal: -19.0%
- Western Cape: -24.1%
Sweet potato fries
Once again the Western Cape showed the strongest decline in average price change over the last 12 months. With the average price per kilogram of sweet potatoes dropping a whopping -24.1% in the Western Cape over the last 12 months. Now if those in the Western Cape were substituting potatoes for sweet potatoes the substitution effect would have increased the demand for sweet potatoes, and in economics 101 classes the first rule is that if demand increases the price will increase (assuming stable supply). Yet this did not happen in the Western Cape. So where sweet potato prices from a year ago just to expensive in the Western Cape? Even with a strong -24.1% drop in the price of sweet potatoes in the Western Cape its still the province with the 3rd highest average price per kilogram of sweet potatoes.
We continue to be facinated by the pricing behavouir of items and products (whether it be due to consumer demand, retailer behaviour, weather events) and we will continue to look at average prices of various items and products per province in coming weeks and months
We continue to be facinated by the pricing behavouir of items and products (whether it be due to consumer demand, retailer behaviour, weather events) and we will continue to look at average prices of various items and products per province in coming weeks and months