Rough start to 2023 for hungry South Africans
Food prices in South Africa shot up significantly in December 2022, where a basket of goods cost 13.5% more than the year before.
This is according to the latest Household Affordability Index by the Pietermaritzburg Economic Justice & Dignity group (PMBEJD), which shows that food prices in South Africa continued to rise in December, putting households on the back foot for the start of 2023.
For December 2022, the group’s basket of nutritional foods came to R4,853.18, up by R17.21 (0.4%) from R4,835.96 in November 2022, and up R577.24 (13.5%) from R4,275.94 in December 2021.
Prices were also up over 10% from the start of the year, where the basket was recorded at R4,401.02 in January 2022.
The year-on-year increase outstrips headline inflation by quite a considerable margin, and even food inflation tracked by Stats SA. Headline inflation was recorded at 7.4% in November 2022, down marginally from 7.6% in October 2022.
Food and non-alcoholic beverages increased by 12.5% year on year, and were one of the key drivers keeping inflation elevated.
The majority of South African households can ill-afford these elevated prices, with the PMBEJD’s data showing that an estimated 30.4 million people in the country – more than half the population – are currently living below the upper-bound poverty line of R1,417 a month.
Shockingly, the group estimated that a quarter of the population, some 13.8 million people, are living below the food poverty line of R663 a month.
The latest food inflation brief from the Bureau for Food and Agricultural Policy (BFAP) shows that food prices in South Africa remain at elevated levels and that consumers should expect higher prices in the first quarter of 2023 at the very least.
According to the BFAP, food inflation is likely to remain high in the first three months of 2023 as the full effects of persistently increasing commodity prices and weaker exchange rates filter through to retail markets.
“We expect that food inflation could peak in the first quarter of 2023, after which the higher base effects apparent from March will result in smaller inflationary effects during the rest of 2023,” it said.
The group said that two variables that should be monitored to gauge inflation rates during 2023 are global maize prices and the ZAR/USD exchange rate.
“In terms of the former, a reduction in prices based on a favourable Southern hemisphere crop could go a long way in curbing Bread and Cereal inflation during the first half of 2023, whilst this could also spill over into meat prices by the second half of the year,” the group said.
Regarding the ZAR/USD exchange rate, analysts note that the ZAR is undervalued and could strengthen to levels of R16.50 in the first quarter of 2023, which would be good news for food prices locally. The rand has enjoyed some relative strength in the opening days of the new year, but global markets remain volatile and could send the unit any which way.
Rising prices
The PMBEJD basket comprises 44 core food items most frequently purchased by lower-income households, who make up most households in the country.
In the basket, only two items showed a price drop between December 2021 and December 2022 – potatoes, which are now 5% cheaper, and curry powder, which is 1% cheaper.
Two items showed no or negligible change – sugar beans and butternut are the same price.
The other 40 items in the basket all saw a price jump, 25 of which were in the double digits. Notably, onions are almost double the price they were last year, having seen a 99% price increase.
Cake flour and cooking oil are also significantly more expensive, seeing 34% and 30% increases, respectively, over the last 12 months.
These are the food items that have seen the largest price increases year on year:
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