South African food prices are expected to shoot up as the country faces the worst drought in two decades, and the rand loses strength against the dollar.<\/p>\n
This is according to a report by Bloomberg<\/a>, citing forecasts from Stanlib Asset Management and Macquarie Group.<\/p>\n The financial groups have predicted\u00a0that food inflation in the country is set to move above 10% by the middle of 2016\u00a0–\u00a0which is double the current pace.<\/p>\n South Africa’s food prices face pressure on three fronts: global food pressures, local currency weakness, and the domestic drought. This will ultimately be forced onto consumers, Stanlib said.<\/p>\n Early on 26 November, the rand was trading at R14.21 to the dollar. The last time South Africa’s food price inflation was around 10% was in 2011 and 2012, during another drought. At the time, the rand was trading at R8.08 to the dollar.<\/p>\n The drought in the country has put maize crops in danger, forcing South Africa to import corn. Corn is both a staple food for South African citizens, and is used for livestock feed.\u00a0Corn prices have increased by more than 50% this year.<\/p>\n Higher food prices will have a massive negative impact on the poor, who spend a bigger portion of their total income on food products.<\/p>\n According to data from the South Africa Institute of Race Relations, poor households spend a third (33.5%) of their income on food, compared to wealthier households which spend over a tenth (10.8%).<\/p>\n Overall, South Africans spend about a quarter (25.3%) of their total income on food.<\/p>\n Economist Mike Shussler said that the ongoing drought, the pressures on the rand, low commodity prices, and visa restrictions could shift the country into a recession by early next year.<\/p>\n South Africa\u2019s economy grew marginally by 0.7% in the third quarter of 2015, according to data from Statistics SA – narrowly avoiding a technical recession – following a 1.3% contraction\u00a0in the second quarter.<\/p>\n Prepare for 2016 recession: economist<\/a><\/strong><\/p>\n South Africa narrowly avoids recession<\/a><\/strong><\/p>\nMore on South Africa<\/h3>\n