31 March 2023 - 05:00The Competition Commission’s Essential Food Price Monitoring Report, released this week, is the eighth such report it has published since 2020. The commission’s interest in food prices is therefore not new.
Given its mandate, it is right that the commission should be concerned with inefficient markets that yield uncompetitive prices. From an economic point of view, the price of food is determined by demand and supply factors. Supply shocks such as those discussed above will result in increased prices. These supply shocks are recognised in the report's introduction. However, the analysis of price movements in the focus products — sunflower oil, bread, maize meal and fruit & vegetables — does not attempt to link any of the price volatility to these known drivers of food prices.
It is therefore an extremely far-fetched notion that investigations by the commission into the price of sunflower oil could have contributed in any way to a decline of almost 30% in the price of a 750ml sunflower oil unit over the period June to December 2022.
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