South Africa’s food inflation has fallen to its lowest level in more than a decade, but rising fuel costs and global tensions could threaten the relief for households.
Statistics South Africa says food and non-alcoholic beverage inflation slowed to 0.9% last month, with lower prices for meat and cereal products helping to ease pressure on consumers.
Speaking to VOC News, Agricultural Business Chamber of South Africa chief economist Wandile Sihlobo says the decline is largely being driven by strong agricultural production.
“We have had one of the excellent agricultural seasons on the back of the La Niña rains,” Sihlobo says.
He says South Africa recorded its biggest maize harvest on record, with overall grain production estimated at 21.6-million tonnes and maize production at about 17.4-million tonnes.
Sihlobo says lower grain prices are providing some relief, while increased local meat supplies have also contributed to declining prices.
However, he warns that rising fuel and fertiliser costs could push food prices higher, particularly as most food in South Africa is transported by road.
“For now, all the way to the first quarter of next year, we think that things for households will remain at least slightly affordable,” he says.
Sihlobo says the biggest risks are higher energy costs and the possibility of an El Niño bringing drought conditions to Southern Africa.
He says food price increases are expected to remain moderate in the near term, but consumers could face greater pressure from the second quarter of next year.
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