Clarity on the reporting of prices for frozen chicken in SA

15 Jun 2016

Part of the NAMC mandate is to monitor and report on food prices on a regular basis. NAMC has been releasing various annual and quarterly reports, since 2004, on food prices with the publications using data supplied by Statistics South Africa (Stats SA) and various industry role players.

Zyxoas via Wikimedia Commons

As a response to the increasing number of queries with regards to the calculation of, specifically, chicken meat prices, a methodology clarification was requested from Stats SA.

Methodology

The price collection methodology of Stats SA applicable for compiling the CPI is calculated by averaging the change in the prices of each observed product, and not from the change in the average of the prices. As a response to the increasing number of queries to Stats SA for average price information, Stats SA recently introduced additional specific codes for different packaging sizes as from January 2016, instead of converting variable sizes to one standardised
unit (pre-January 2016).

Specifically looking at meats, frozen chicken is the product most affected by the methodology change. Previously all frozen chicken was converted to a per kg price, irrespective of its packaging, but with this change the 2kg, 1.5kg and variable size priced per kg emerged as being consumed most. As 2kg and 1.5kg tend to be cheaper than other package sizes, this change had the impact of increasing the average price of the per kg category. The average price per kg category now shows a reported increase of 26% in the average price, compared to an increase of close to zero in the pre-2016 method.

To rectify the discontinuity, Stats SA will provide three average prices for frozen chicken: (1) an average of those that are of variable weight and then priced according to their weight; (2) a continuation of the pre-2016 method where all frozen chicken is converted into a per kg price and then averaged; and (3) an average price of the a 2kg bag of frozen chicken from January 2016 onwards.

The NAMC will utilise this new information to analyse the changes of price levels in the future. A formal request will be forwarded to Stats SA to further distinguish between frozen and individually quick frozen (IQF) chicken, which makes out approximately 60% of the market, in determining the new food consumer basket in 2017.