After trading in a deflationary environment for the past year, during which its internal measure showed that average selling prices dropped 1.2% in the 52 weeks to 1 March 2026, retailer Boxer has warned that it “expects selling prices to gradually rise through the remainder of FY27 as the impacts of the war flow through the supply chain”.
CEO Marek Masojada says “recent turnover trends are lower than those experienced in the second half of last year, and we have seen deflation continue into the new financial year”.
Over the same 12-month period as its financial year (effectively to end February), Statistics South Africa reported food and non-alcoholic beverage inflation of 4.4%.
“We are receiving notice from many of our suppliers of pending price increases and, whilst we will do our best to maintain prices for as long as possible, it is inevitable that there will be a return to an inflationary environment.”
The sharp increase in the price of fuel – especially diesel – only took effect in April and these input costs will take a while to flow through the supply chain and ultimately into the prices that shoppers will pay at the till.
Winners and losers: From rice to meat
Over the past year, there has been deflation of over 25% in commodities like rice and maize, explains Masojada, driven by the supply-side in major producing markets, India and Vietnam.
The rand’s strength across the year also played a big role.
Because of the importance and size in the average basket of Boxer’s core customer, deflation in the two categories has made it more challenging for the retailer to grow turnover.
Other categories which have seen noticeable deflation are cooking oil, sugar, fruit and vegetables, washing powders, and beer, he says.
Rival Shoprite said in March that a “record” 14 400 items on its shelves were cheaper in December 2025 than in December 2024.
On the other side of the coin, the price of red meat (primarily beef) has been driven around 14% higher by foot-and-mouth disease, and he says chicken prices have also increased.
Masojada highlights that: “Obviously fuel and energy costs are likely to play a role going forward. [These have] not materialised as yet”.
Fuel prices, consumer behaviour
Aside from the clear impact on direct costs, higher fuel prices will also impact input costs for most products because of things like packaging, for example.
He says the impact of higher fuel prices is likely to also alter customer shopping behaviour and the retailer “will start to see customers maybe increasing basket size and trying to not do as many visits… to cut down on the cost of [transport]”.
The group spent R310 million on diesel in FY26, which equates to 0.7% of turnover.
The bulk of this is in its supply chain (the cost of trucking goods to stores) although it also utilises diesel for backup generators at its stores. It is “currently absorbing” these increased costs as they work their way through the system.
Masojada explains that this is because the business entered April with its tanks “full”, which meant only a small impact in that month.
However, this is starting to be felt and he says “the challenge across the business is to be able to manage other costs in other areas to try and avoid having to pass that through”.
Elevated oil and diesel prices …
The planned unwinding of the fuel levy relief in June, which will cut the temporary relief by half, means there will be a big impact on fuel prices in both June and July, practically regardless of what underlying prices and the exchange rate does.
The group says that if diesel prices remain at current levels, there will be “an impact of around R15 million a month on the income statement”.
Boxer admits that “elevated oil and diesel prices mean that the trading outlook for FY27 is unclear”.
It “expects the war in the Persian Gulf to impact food inflation, logistical costs, and the ability of the consumer to spend”.
“How these factors ultimately play out is uncertain, and is largely predicated on the duration of the war.”
Excluding the impact of the additional week in the prior year, the group grew trading profit by 17.3% to R2.6 billion, with its trading margin expanding from 5.4% to 5.7% “despite absorbing substantial incremental operating costs”, including those for its 51 net new stores and its new distribution centre in Tongaat.
This article was republished from Moneyweb. Read the original here.
