Beef prices in South Africa hit with record increase
Inflation has ticked up in South Africa, with beef prices, especially those for stewing beef, seeing massive price increases as the country battles an outbreak of foot and mouth disease.
Consumer inflation increased in June to 3.0%, rising from 2.8% in April and May. The month-on-month change in CPI was 0.3%.
Stats SA said that the annual rate for food & non-alcoholic beverages (NAB) reached a 15-month high of 5.1% in June.
Meat, especially beef, continues to be the main driver of food inflation. Beef prices spiked for a third straight month, with large increases for stewing beef, mince and steak.
Stewing beef rose by an annual 21.2%, the fastest pace on record since the current CPI series began in January 2017.
Local sellers of beef have recently warned South Africans about price hikes due to shortages of protein, driven by the outbreak of foot and mouth disease at the country’s largest feedlots.
Looking elsewhere, other processed food items also saw an uptick. The annual rates for fruits & nuts and vegetables remained in double-digit territory for a second straight month.
Products that saw sharp price increases in the 12 months to June included beetroot, lettuce and carrots.
However, inflation cooled for many other food & NAB categories, such as white rice, hot cereals, and cold cereals.
While maize meals register high annual increases, the monthly change in June was 0.4%, the lowest since November 2024 (-0.1%).
Several dairy products are also cheaper than they were a year ago. Lower prices were recorded for fresh full-cream milk, fresh low-fat milk and eggs.
The decreases helped pull the milk, other dairy products & eggs index into deflationary territory, with an annual change of -0.5%.
That said, the category still saw a monthly rise of 0,3%, the highest since August 2024. Cheese products significantly contributed to this increase.
Away from food, Stats SA collects rental data once a quarter. The annual change for actual rentals rose from 2.9% in Q1 to 3.0% in Q2.
The rate for imputed rentals also increased slightly, from 2.4% to 2.5% over the same period.
Fuel prices continued a downward trajectory, declining for a fourth consecutive month. Fuel is, on average, 11.2% cheaper than a year ago.
Outlook
Investec Chief Economist Annabel Bishop said that CPI inflation is expected to rise further over the third quarter, as low base effects boost the outcome.
CPI inflation is likely to go above 3.0% in July, then rise towards 4.0% by the end of the year, and run above 4.0% next year.
That said, the real interest rate in South Africa is still very high, with the repo rate standing at 7.25%.
“We expect at least one further 25bp cut in the repo rate this year, either at the July MPC meeting this month, or later in the year and a further 25bp cut next year, as the Reserve Bank remains hawkish,” said Bishop.
“However, additional cuts in the repo rate are warranted of at least -1.00%, given the neutral interest rate is about 2.0% above inflation, and demand is weak. The SARB has room to cut at each remaining meeting this year and should do so.”
Loading ...