Bad to worse for coffee prices in South Africa

Consumer inflation may have dropped for the third straight month, but coffee prices have continued to climb, with inflation hitting a 19-month high.

Consumer inflation dropped for a third month, falling from 4.6% in July to 4.4% in August—the lowest level since April 2021 and below the South African Reserve Bank’s target of 4.5%.

Stats SA said that lower annual rates were recorded for several product groups, most notably transport, housing, and restaurants & hotels.

In contrast, inflation for food & non-alcoholic beverages (NAB) and alcoholic beverages & tobacco edged higher in August.

Annual food & NAB inflation increased, rising from 4.5% in July to 4.7% in August.

Most product groups registered higher annual rates, including bread & cereals; meat; fish; milk, eggs & cheese; oils & fats and vegetables. Lower rates were, however, recorded for fruit, sugar, sweets & desserts, and both hot and cold beverages.

That said, hot beverage inflation continued to burn. Although the annual print dropped from 17.6% in July to 17.5% in August, it still had the highest rate of all food and NAB categories.

Instant coffee inflation hit a 19-month high of 22.3%. The average price for 250 grams of instant coffee was R67.37 in August 2024, up from R52.71 in August 2023.

The increase in coffee prices is due to a decline in the size of coffee harvests and underlying stocks in the main producer countries.

Moreover, annual bread and cereals inflation rose for the third straight month, with the rise (up 17.3%), pizza and pies (up 10.9%) and hot breakfast cereals (up 7.9%) rising substantially.

The monthly rise in bread & cereals was 0.4%, with notable increases recorded for grain-based products such as bread flour (up 2.1%), brown bread (up 1.3%) and white bread (up 1.2%).

The meat index also increased on an annual basis but did see a 0.4% monthly decrease.

Several chicken and beef products were cheaper in the month, with decreases seen for fresh whole chicken (down 2.2%), sausage (down 1.7%), chicken giblets (down 1.3%) and beef mince (down 1.3%).

However, bacon, beef extract, corned beef, fresh chicken portions, ham and biltong were more expensive.

Looking more positively

Transport-related products recorded softer annual rates in August, with fuel prices continuing to trend downwards, decline for a third straight month.

The fuel index dropped by 0.5% month-on-month, slowing the annual rate to 1.8%. The price of 95-octane petrol dropped 15c less per litre in August to R23.11.

“Transport’s influence on overall inflation has waned since mid-2022, when it was the biggest factor behind the rise in the cost of living. It accounted for 44% of overall inflation in July that year,” said Stats SA.

“Fast forward to August 2024, transport accounted for 9%, placing it behind other major contributors such as housing & utilities and food & NAB.”

In August, housing & utilities accounted for a quarter of the total inflation rate.

After the July CPI results, Stats SA also completed its survey of municipal service charges in August. This showed that the electricity tariffs increased by 0.1% monthly, taking the annual rate to 11.5%.

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