‘Over the hill’ for South Africa – but pricing pressure still on
Following a three-month increasing trend at the end of 2023, year-on-year inflation on food and non-alcoholic beverages (NAB) has decreased quite sharply – from 9.0% in November 2023 to 6.1% in February 2024.
These levels are in line with rates last seen in March/April 2022, showing that South Africa has effectively come ‘over the hill’ of extreme food inflation seen over the past two years.
Despite this relief, however, the Bureau for Food and Agricultural Policy (BFAP) says the rising headline (CPI) inflation since December 2023 is keeping households under some pricing pressure.
Commenting on the inflation figures for February 2024, published in the later weeks of March, the BFAP noted a small decrease in its “thrifty” food basket price, down 0.1% from last month, and up only 4.5% from last year.
This is lower than the headline inflation figure for the month (5.6%) recorded by Stats SA for the month.
Several key food categories are experiencing deflation, the BFAP said, especially meat (pork, beef, mutton) but there are still many – especially fruits and vegetables – that are experiencing high levels of inflation.
Overall, however, South Africa’s food price inflation reflects the same trend as global prices, which have also made it ‘over the hill’, so to speak.
In February 2024, the FAO Food Price Index (FPI) reached a value of 117.3, similar to index values last observed in February/March 2021, the BFAP said.
The FPI registered a marginal decline (-0.7%) in February 2024 compared to the previous month and was lower by 10.5 % YoY. The decline is attributed to the decline in price indices for cereals (-5.2%) and vegetable oils (-1.3%), which outweighed increases in sugar, meat, and dairy product prices.
International meat prices recovered 1.8% in February, following a decline over seven months. Poultry prices showed an upturn (+4.0%) due to revived demand, and bovine prices were up 3% on lower-than-expected supply, but other categories tracked lower.
South African meat prices moved against international trends, however, with the BFAP noting that the weak exchange rate put pricing under pressure due to weak demand. This means lower prices, locally, but not driven by supply.
“The livestock sector was under pressure in February as prices for all meat types were marginally down underpinned by weakened demand. Prices of pig meat showed the steepest decline by 2.9%, improving relative affordability, as the Avian Influenza (AI) outbreak drove poultry prices up sharply towards the end of 2023,” the group said.
Poultry prices have also contracted since December 2023, reflecting an improvement in local supply of chickens in the post-AI outbreak period.
Prices of sheep and beef were down by 1.2% and 0.6%, respectively.
The group noted that demand for meat would typically be expected to improve in March as a result of the Easter holidays.
On the fruit and vegetable side, average veggie prices declined by 12.8% compared to February 2023, the BFAP said. Fruit saw prices also trend lower in some categories, driven by seasonal supply and subdued demand leading to more stock.
As previously reported, there is trouble brewing in the maize side of things, with prices shooting up in February, counter to international trends, on the back of lower crop numbers.
The BFAP warned that similar moves were being seen in oilseed prices, which – while lower in February – started showing an upturn in March.
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