1 00:00:00,360 --> 00:00:06,840 Speaker 1: Current events, developing stories, tough questions, your voice making a difference. 2 00:00:07,880 --> 00:00:09,920 Speaker 2: This is breakfast. 3 00:00:09,400 --> 00:00:13,039 Speaker 1: We're asking you a very simple question this morning. How 4 00:00:13,080 --> 00:00:17,439 Speaker 1: are you bracing yourself for the upcoming or the expected 5 00:00:17,560 --> 00:00:21,480 Speaker 1: hard winter. President Ramapause at the weekend saying he has 6 00:00:21,520 --> 00:00:24,360 Speaker 1: not been sleeping very much, nor has his Finance minister 7 00:00:24,480 --> 00:00:27,520 Speaker 1: in ok Goodoon Guyana, who is of course crunching the 8 00:00:27,640 --> 00:00:30,880 Speaker 1: numbers to see what relief he can offer hard pressed 9 00:00:30,960 --> 00:00:34,720 Speaker 1: South Africans ahead of expected increases in the price of 10 00:00:34,800 --> 00:00:41,080 Speaker 1: just about everything principally fuel, fertilizer and that means food. 11 00:00:41,360 --> 00:00:44,879 Speaker 1: And how will consumers know that the new prices are 12 00:00:45,040 --> 00:00:49,040 Speaker 1: solely due to the less the latest crisis. What about 13 00:00:49,080 --> 00:00:52,200 Speaker 1: those businesses who may now see an opportunity to make 14 00:00:52,280 --> 00:00:55,680 Speaker 1: a quick buck. The Competition Commission has come out warning 15 00:00:55,760 --> 00:00:59,400 Speaker 1: unscrupulous retailers not to take advantage of the crisis and 16 00:00:59,480 --> 00:01:03,480 Speaker 1: to hike prices unduly. Well joined now by James Hodge, who, 17 00:01:03,480 --> 00:01:08,039 Speaker 1: as I say, is the chief Economist of the Competition Commission. James, 18 00:01:08,080 --> 00:01:09,520 Speaker 1: A very good morning to you and welcome to seven 19 00:01:09,560 --> 00:01:10,320 Speaker 1: as your breakfast. 20 00:01:11,360 --> 00:01:12,240 Speaker 2: Thank you, Bongani. 21 00:01:12,800 --> 00:01:14,200 Speaker 1: How badly are we going to be hit? 22 00:01:16,040 --> 00:01:18,840 Speaker 2: Well? The price increase is quite a big shocks. It's 23 00:01:19,400 --> 00:01:21,640 Speaker 2: I think today it's over one hundred and ten dollars 24 00:01:21,640 --> 00:01:26,319 Speaker 2: a barrel, so almost double the price that we saw 25 00:01:26,400 --> 00:01:29,240 Speaker 2: probably a few months ago. So we do expect that 26 00:01:29,319 --> 00:01:30,840 Speaker 2: it is going to be a hard hit. And as 27 00:01:30,880 --> 00:01:33,880 Speaker 2: you rightly pointed out, it's not just the fuel and 28 00:01:34,360 --> 00:01:37,960 Speaker 2: the services that rely on the fuel, but probably fertilizers, 29 00:01:38,000 --> 00:01:41,600 Speaker 2: plastics and food products that are intensive users of oil 30 00:01:41,640 --> 00:01:42,880 Speaker 2: based products. 31 00:01:43,240 --> 00:01:48,200 Speaker 1: I mean, can you distinguish between a legitimate price increase 32 00:01:48,680 --> 00:01:50,280 Speaker 1: and out right price guging? 33 00:01:52,680 --> 00:01:55,680 Speaker 2: Well, we can investigate and determine that, but for the 34 00:01:55,720 --> 00:01:58,600 Speaker 2: consumer it's very difficult because you're going to expect a 35 00:01:58,640 --> 00:02:01,680 Speaker 2: price increase because you no oil has gone up, but 36 00:02:01,760 --> 00:02:04,560 Speaker 2: you don't know what's a reasonable amount by which the 37 00:02:04,560 --> 00:02:07,560 Speaker 2: price should increase and when it should happen. And that's 38 00:02:07,560 --> 00:02:12,560 Speaker 2: the problem. So businesses unscrupulous one certainly can over exploit 39 00:02:12,600 --> 00:02:15,799 Speaker 2: the consumer and push our prices earlier before their costs 40 00:02:15,800 --> 00:02:19,400 Speaker 2: actually go up, or by much more than their actual 41 00:02:19,440 --> 00:02:21,800 Speaker 2: costs have gone up. And that's what we're trying to 42 00:02:21,880 --> 00:02:25,600 Speaker 2: stop happening, because, as you rightly said, the President the 43 00:02:25,600 --> 00:02:28,560 Speaker 2: Finance Minister are concerned about This is a big impact 44 00:02:28,560 --> 00:02:31,400 Speaker 2: on the economy, and we don't want it exacerbated by 45 00:02:31,520 --> 00:02:33,520 Speaker 2: businesses trying to exploit the situation. 46 00:02:33,800 --> 00:02:36,160 Speaker 1: I'd imagine, James. A rule of thumb for the average 47 00:02:36,160 --> 00:02:40,600 Speaker 1: consumer is to compare prices and of course, hope, hope 48 00:02:40,600 --> 00:02:41,480 Speaker 1: there's no collusion. 49 00:02:43,240 --> 00:02:45,720 Speaker 2: Yeah, and they can report to us if they feel 50 00:02:45,800 --> 00:02:48,840 Speaker 2: that this increase has been far too quick or far 51 00:02:48,960 --> 00:02:51,640 Speaker 2: too rapid. And we saw last week consumers did react 52 00:02:51,680 --> 00:02:56,280 Speaker 2: to prices at the pumpor diesel and expressing their concern 53 00:02:56,480 --> 00:02:59,440 Speaker 2: and active consumers is what's going to stop this happening, 54 00:02:59,800 --> 00:03:02,480 Speaker 2: and consumers that then also shop around. 55 00:03:03,520 --> 00:03:07,040 Speaker 1: So when I mean how rapidly can we expect these 56 00:03:07,120 --> 00:03:12,720 Speaker 1: increases to filter to things like food or transport for example. 57 00:03:14,400 --> 00:03:16,640 Speaker 2: Well, the prices that the pump are going to go 58 00:03:16,840 --> 00:03:23,359 Speaker 2: up this week, and although the diesel price is regulated 59 00:03:23,400 --> 00:03:26,560 Speaker 2: at the wholesale level, is not regulated at the retail level. 60 00:03:27,000 --> 00:03:31,680 Speaker 2: So we should still not expect increases before the Wednesday announcements. 61 00:03:32,280 --> 00:03:35,840 Speaker 2: But after that, you know, some prices may go up 62 00:03:35,920 --> 00:03:38,280 Speaker 2: very quickly. At the pump, they will go up immediately, 63 00:03:38,960 --> 00:03:42,400 Speaker 2: but in others we wouldn't expect them to go up immediately, 64 00:03:42,480 --> 00:03:45,880 Speaker 2: you know, for things like fertilizer, there's adequate stocks or 65 00:03:45,880 --> 00:03:49,200 Speaker 2: fertilizer at the old price that should be still made 66 00:03:49,240 --> 00:03:52,640 Speaker 2: available at the old price until that filters through to 67 00:03:52,720 --> 00:03:56,480 Speaker 2: the new stocks. And with food, I think it's a longer, 68 00:03:56,720 --> 00:04:00,280 Speaker 2: longer term sort of impact because that may be months 69 00:04:00,280 --> 00:04:05,280 Speaker 2: away for some of the food products only once fertilizer 70 00:04:05,320 --> 00:04:07,160 Speaker 2: prices go up and transport cost go up. 71 00:04:07,160 --> 00:04:09,240 Speaker 1: All right, So you're not saying, now, go fill up 72 00:04:09,480 --> 00:04:11,680 Speaker 1: your cupboards and stuck up as much as you can 73 00:04:11,760 --> 00:04:14,240 Speaker 1: because food will go up on Wednesday. That's not the 74 00:04:14,320 --> 00:04:16,760 Speaker 1: scenario now. If fuel will. 75 00:04:17,680 --> 00:04:21,000 Speaker 2: Certainly fuel will, but if some of the food products 76 00:04:21,040 --> 00:04:23,560 Speaker 2: go up on Wednesday, we would expect that is jumping 77 00:04:23,560 --> 00:04:27,000 Speaker 2: the gun and price garging, and we would then investigate. 78 00:04:27,279 --> 00:04:30,200 Speaker 2: And we're asking consumers to just be watchful and report 79 00:04:30,279 --> 00:04:34,000 Speaker 2: to us so that we can investigate, and if businesses 80 00:04:34,080 --> 00:04:38,080 Speaker 2: are engaged in price garging, then then we will take action. 81 00:04:38,720 --> 00:04:41,520 Speaker 2: And in effect, what we ask a business is is 82 00:04:41,600 --> 00:04:45,240 Speaker 2: don't push up prices before your actual costs increase, and 83 00:04:45,279 --> 00:04:48,080 Speaker 2: then when your cost do increase from fuel only, put 84 00:04:48,080 --> 00:04:50,520 Speaker 2: it up by the same amount your costs have increased, 85 00:04:50,560 --> 00:04:54,040 Speaker 2: so that your margins stay the same. If your margins 86 00:04:54,080 --> 00:04:56,800 Speaker 2: go up, we're going to accuse you of price guging. 87 00:04:57,040 --> 00:04:59,920 Speaker 1: Is that something you encounter regularly in South Africa into 88 00:05:00,160 --> 00:05:01,760 Speaker 1: of our landscape. 89 00:05:03,440 --> 00:05:05,479 Speaker 2: We have seen this in the past. So in the 90 00:05:05,520 --> 00:05:10,200 Speaker 2: past we've seen with oil price increases, we've seen collusion 91 00:05:10,240 --> 00:05:14,719 Speaker 2: amongst airlines around fuel surcharges in Covid and with the 92 00:05:14,800 --> 00:05:18,960 Speaker 2: Ukraine War, we saw businesses jumping the gun. And that's 93 00:05:19,000 --> 00:05:22,679 Speaker 2: where we do now have case precedent, legal precedent around 94 00:05:22,760 --> 00:05:25,160 Speaker 2: what businesses should do and what they should not do. 95 00:05:25,640 --> 00:05:29,240 Speaker 2: And that's why we are saying that that the courts 96 00:05:29,279 --> 00:05:31,800 Speaker 2: have found in the past that if you've jumped the 97 00:05:31,839 --> 00:05:35,000 Speaker 2: gun and pushed up prices before your costs increased, they 98 00:05:35,040 --> 00:05:38,240 Speaker 2: will find you guilty. And if you push up prices 99 00:05:38,240 --> 00:05:40,240 Speaker 2: by far more than your cost they will also find 100 00:05:40,279 --> 00:05:44,159 Speaker 2: you guilty. So we have seen this. It's not necessarily 101 00:05:44,160 --> 00:05:47,280 Speaker 2: widespread that there will be businesses that try their. 102 00:05:47,279 --> 00:05:50,600 Speaker 1: Luck, right, So what can you do initiate litigation? 103 00:05:52,720 --> 00:05:56,560 Speaker 2: Yes, so if consumers complain to us, we will we 104 00:05:56,600 --> 00:05:58,479 Speaker 2: will investigate the business. 105 00:05:58,520 --> 00:06:03,080 Speaker 3: We will ask them for for what their prices were 106 00:06:03,160 --> 00:06:07,240 Speaker 3: prior to this shock, what the prices are afterwards what 107 00:06:07,320 --> 00:06:10,960 Speaker 3: their margins are, and if they are increasing the margins 108 00:06:11,120 --> 00:06:13,240 Speaker 3: there are price garging, we will take action. 109 00:06:14,279 --> 00:06:17,400 Speaker 1: So I suppose your job is to just alert consumers 110 00:06:17,480 --> 00:06:20,520 Speaker 1: to be watchful, but also to let them know you're 111 00:06:20,560 --> 00:06:25,480 Speaker 1: watching the system closely. Finally, of course, we have no 112 00:06:25,560 --> 00:06:28,880 Speaker 1: idea when this will all end. There's now some speculation 113 00:06:29,040 --> 00:06:33,560 Speaker 1: that there might be ground troops invading Iran or trying to, 114 00:06:33,760 --> 00:06:36,039 Speaker 1: so that means the volatility of the price of oil 115 00:06:36,160 --> 00:06:41,760 Speaker 1: may continue. What's the bigger risk to the economy, I 116 00:06:41,800 --> 00:06:47,000 Speaker 1: suppose on a medium even long term basis. 117 00:06:45,839 --> 00:06:48,960 Speaker 2: Yeah, you're right, there's a lot of uncertainty, but we 118 00:06:49,040 --> 00:06:53,320 Speaker 2: can alesso see that prices come down if the war 119 00:06:53,480 --> 00:06:58,680 Speaker 2: end soon and stability comes to the oil price market. 120 00:06:59,440 --> 00:07:01,400 Speaker 2: And that's where we've seen in the past as well. 121 00:07:01,440 --> 00:07:04,800 Speaker 2: The businesses are slow to then drop their prices, and 122 00:07:04,839 --> 00:07:07,919 Speaker 2: that is still price gounting if your costs have actually 123 00:07:07,960 --> 00:07:12,560 Speaker 2: decreased and you haven't reduced your prices. So I think 124 00:07:12,600 --> 00:07:15,880 Speaker 2: the risks for us is obviously that this is prolonged, 125 00:07:16,240 --> 00:07:19,480 Speaker 2: and the economic impact on the global economy and not 126 00:07:19,560 --> 00:07:23,880 Speaker 2: just the local economy means that we see reduced demand, 127 00:07:23,960 --> 00:07:28,640 Speaker 2: reduced growth, but we also face risks that it is resolved, 128 00:07:28,640 --> 00:07:31,760 Speaker 2: but that cost is still built into prices and doesn't 129 00:07:31,760 --> 00:07:32,160 Speaker 2: come down. 130 00:07:32,760 --> 00:07:35,120 Speaker 1: Oh, I appreciate your time. James Hodge is the chief 131 00:07:35,120 --> 00:07:39,200 Speaker 1: economist of the Competition Commission of South Africa. So anybody 132 00:07:39,200 --> 00:07:42,000 Speaker 1: who tells you that prices will go up from Wednesday 133 00:07:42,080 --> 00:07:45,480 Speaker 1: already is likely jumping the gun. But we've all got 134 00:07:45,520 --> 00:07:47,920 Speaker 1: to do our homework and you know, keep the retailers 135 00:07:47,960 --> 00:07:53,080 Speaker 1: and businesses on their toes. Compare prices, consider what things 136 00:07:53,160 --> 00:07:57,200 Speaker 1: cost now and just over the next few weeks. Continue 137 00:07:57,280 --> 00:08:00,600 Speaker 1: monitoring whether or not they jump severe early and by 138 00:08:00,640 --> 00:08:04,920 Speaker 1: how much those increases might be. But the Competition Commission 139 00:08:04,960 --> 00:08:06,679 Speaker 1: also saying it's keeping an eye on things