Statistics South Africa this week published the latest inflation figures for August 2021, showing that food price inflation remains one of the most significant contributors to CPI in the country.
The food and non-alcoholic beverages product group was the second-largest contributor to the annual inflation rate in August, recording an increase of 6.9%. This is the highest level of food inflation since June 2017, when it was also 6.9%.
However, there are signs that food inflation may have begun to slow, Stats SA said.
The monthly increase in August 2021 was 0.2% – identical to the readings for both July and June. By comparison, the average monthly gain over the past 12 months was 0.6%. Of the 11 food categories, four registered monthly decreases in August; one showed no change and six recorded increases.
Prices for bread and cereal products declined by 0.5% from July 2021. Maize meal prices decreased by 1.2% and white bread by 1.1%. The annual increase for this category was 3.5%.
Meat inflation continues to accelerate, reaching 10.7% in August. This is the highest level since February 2018, when the rate was 11.4%. IQF (individually quick frozen) chicken products were 1.6% more expensive in August compared with July, while minced beef was 0.4% cheaper.
Annual inflation for oils & fats registered at 21.3% in August, slightly down from 22.4% in July. Cooking oil prices dipped by 0.4% and margarine by 0.8% month-on-month.
Rising food prices
Research from the Pietermaritzburg Equity, Justice and Dignity group (PMBEJD) has found that food price inflation for poorer households in South Africa has increased by 10% over the last year – far above the headline CPI of around 5%.
BusinessTech has been tracking a more ‘middle class’ food basket since 2015, comprising some food items that would be more commonly found in a more middle-income shopping basket.
This includes apples, vegetables, milk, flour, tea, sugar, rice and cola. While the basket itself is not a comprehensive look at middle-class shopping items, it tracks price fluctuations in the segment and across various retail brands.
Year on year, comparing like-for-like brands and food items, South Africa’s retailers have managed to keep prices increases contained for the most part, with some things even decreasing between 2020 and 2021.
Since 2015, this basket of items has increased by nearly 50% over the years, with the same like-for-like things jumping from an average total of R226.33 in 2015 to R335.01 in 2021 (+48%).
Taking a five-year look (2017-2021), the increase is more muted at 22%.
Prices reflect the average cost of house brands across four retail chains in South Africa, captured in-store and online the stated year.
Price inflation in the BusinessTech basket tracks closely to food price inflation recorded by Statistics South Africa between 2017 and 2021. Still, it comes in below the growth seen in the average salary and take-home pay over the same period.
Between 2017 and 2021, the average salary increased from R19,170 to R23,122, according to Stats SA’s Quarterly Employment Survey – an increase of 21%. Meanwhile, the BankservAfrica Take Home Pay Index shows an increase in nominal take-home pay of only 14%, from R12,808 in 2017 to R14,620 in 2021.
While the average formal salary in the country has barely kept up with the rising cost of food over the last five years, the reality – available income after tax – is lagging significantly behind.
According to Stats SA, using the base of December 2016, headline inflation has risen by 22.3% over the last five years. Food inflation sits at 23.6% compared to end-2016.
Among the food categories Stats SA looks at, meat products have seen the most significant price jump since 2016.
- Meat: +35.3%
- Oils and fats: 31.8%
- Fish: +28.0%
- Cold beverages: +25.2%
- Unprocessed foods: +24.0%
- Sugar, sweets and desserts: +23.9%
- Processed foods: +23.0%
- Milk, cheese and eggs: +21.7%
- Hot beverages: +19.8%
- Vegetables: +19.2%
- Other food: +16.9%
- Breads and cereals: +9.7%
- Fruit: +1.1%