Price Wars: How Will The VAT Hike Affect You?

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The VAT increase from 14% to 15% is about to cause headaches for us South Africans.

Basket of goods after south african price hike by moneypanda

South Africans are left asking the sad question, why did the VAT really increase? It somewhat feels like we are being punished because the government doesn’t know how to effectively spend the taxes we’ve already paid. Seems strange that VAT increases at the same time that our new presidents increased salary is announced.

How is the VAT hike going to affect you?

The costs involved in bringing the food to your favorite grocer has increased therefore naturally, the consumer is going to be paying more!

The question is how much more… are the grocers going to be taking on some of the increase upon themselves or are they going to pass the whole increase onto the consumer?

On the upside, Zero-rated taxes won’t be affected in any way but certain goods have seen a massive increase in price due to other taxes also being affected. We are going to be seeing an ongoing increase in fuel levies, increasing the price of filling up your tank (as freight costs are increasing), as well as an increase in “health promotion” levy which has affected sugar tax. Dammit guys, we are going to have to slow down on the chocolates! 

Talking about petrol prices... if you want to see why petrol prices are always increasing read our article:

The Real Reason For High Petrol Pricesread more moneypanda

Comparing Woolworths, Pick n Pay, Spar & Checkers

We show you how the retailers compared when it comes to price after the VAT hike:

woolworths vs checkers vs pick n pay vs spar prices by MoneyPanda

(This table and investigation of price was done by BusinessTech. No promotional prices were taken into account)

The comparison clearly shows that Checkers comes out cheaper when looking at the total price of a simple basket of goods and Woolworths as we all know is the most expensive. The price difference between Woolworths and Checkers is R62.46, which is a whopping 19.5% difference. Now, this may not sound like too much when dealing with a small basket but it adds up to a pretty penny at the end of the day!

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See below how the same basket has changed from 2015 to 2018. Yes, Woolworths is the most expensive but their rate of increase has been the least over the last few years at 3.6%. Spar’s prices have increased the most at 7.6%.

VAT hike on south africa increasing cost of shopping by MoneyPanda

 

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