Determining the Cost of Living: A Study of the Basic Needs Basket of Semi-Rural Households of Pietermaritzburg

Abstract

The 2007/2008 global increases in food prices has had a major impact on households but more so in poverty stricken households in developing countries. The severity of this impact needs some form of measurement in order to assess its impact.

However, to define poverty and the method to measure poverty are highly disputed issues. Constructing a 'food basket' of goods and services that are needed to maintain an acceptable level of survival, particularly for low income households, serves as a useful indicator for measuring poverty levels. The Pietermaritzburg Agency for Christian Social Awareness (PACSA) constructed a basic needs basket of goods and services needed on a monthly basis to sustain a household of five. This paper uses the secondary data from PACSA in monitoring food price trends in four retail outlets of Pietermaritzburg Central Business District from June 2007 to July 2008 to measure poverty levels among the surveyed low income households. The PACSA food basket rose from

R 714 in July 2007 to R 912 by June 2008 (28 percent increase), the CPIX increased from 6.5 percent in June 2007 to 11.6 percent by July 2008. This general increase in prices reduced the purchasing and real value of money, especially for households in the lower end of the income categories (R 804 to R 1,500) who spend proportionally more of income on food. A key intervention would be to promote small scale or household food production to cut down on food purchases from retail outlets.

Charles Zulu (2007)

Submitted in partial fulfillment of the requirements for the degree of

PG Dip (Food Security),

African Centre for Food Security,

School of Agricultural Sciences and Agribusiness,

Faculty of Science and Agriculture,

University of KwaZulu-Natal,

Pietermaritzburg