Food prices in South Africa have continued to rise in 2021, with inflation on food and non-alcoholic beverages for September 2021 higher than expected, recorded at 6.6%.
The latest annual baseline produced by the Bureau for Food and Agricultural Policy (BFAP) shows that the monthly cost of a basic food basket now sits at R2,864 for the reference family of two adults and two children.
Consisting of a nutritionally balanced combination of 26 food items from all the food groups, the BFAP ‘thrifty healthy food basket’ is designed to feed a reference family of four – an adult male, an adult female, an older child, and a younger child – for a month.
This aligns with the Pietermaritzburg Economic Justice and Dignity (PMBEJD) group’s latest data, published at the start of October, which highlights some notable food increases in the following categories:
- Chicken and beef offal
The PMBEJD warned that South Africa’s high rate of unemployment and various grants are not keeping up with the rising cost of food. “Over the past several years, we have seen how unemployment has continued to rise. At the same time, the inflation on basic goods and services have increased, making it harder for families to afford their basic needs.
“During this time, the real value of social grants has declined. The result is that food poverty amongst a very large portion of our population has increased. Every year our poverty indices get worse.”
The below table shows how food prices in South Africa have changed over the last five years:
Meat – +10.3% year-on-year
“Headline inflation surprised at a higher than anticipated 5%, with the main contributing categories transport, housing and utilities, and food,” the BFAP said. “In terms of the latter, numerous drivers highlighted in our previous inflation briefs remain relevant.
“These include high red meat prices on the back of lower slaughter numbers and rising world prices, as well as firm chicken prices as a result of strong global prices and the depreciation of the exchange rate through the end of the quarter.”
Oils and fats – +22.4% year-on-year
Despite its small weighting in the food basket, oils and fats are also still a key contributor with year-on-year inflation of 22.4%, the BFAP said.
This is driven by global factors which include supply constraints for products such as palm oil and sunflower oil, combined with strong demand for oilseeds for animal feed and biofuel feedstocks – which is strongly linked to crude oil prices that have more than doubled since September 2020, it said.
“We anticipate that prices for oils and fats will only start to decline meaningfully in the first two quarters of 2022 as global supply and demand fundamentals for the 2021/2022 season point to production surpluses and recovery of stocks in soybean, sunflower and palm oil. However, this could be reversed by continued bottlenecks in shipping.”
Vegetables – +4.2% year-on-year
“Vegetable prices have also remained firm on the back of late winter frost damage in the Northern parts of the country,” the BFAP said.
“However, the effects seem to have abated during October, with improved volumes reaching fresh produce markets.”
BFAP’s view is that inflationary figures for the rest of 2021 can continue to surprise towards the upside as meat prices are expected to remain firm ahead of the festive season.
“Here, higher trending prices are already apparent in the weaner calf market. International markets also remain strong, largely due to persistent stock reduction in major grains and oilseeds and constraints in the supply of beef and lamb from Oceania and South America.”
Other factors such as the projected 99 cents increase in petrol and R1.42 increase in diesel prices per litre are further likely to add to production, processing and distribution costs, which could put upward pressure on food prices in general, the group said.
“It is expected that consumers will, however, only be able to absorb a part of these price increases as leading economic indicators indicative of demand, such as retail and vehicle sales, point to consumers that are already under pressure.”