We have inflation data for July out later this morning, and I will be looking closely at the food category. Last month, South Africa’s consumer food price inflation rose to the highest level in 16 months, at 4.7% in June 2025, from 4,4% in May, underpinned mainly by the recent increases in the meat, oils and fats, and vegetables prices.
Commenting after the release of these figures, I noted that the acceleration does not alter our assessment of moderate food price inflation in 2025. I still maintain this view, although there are a few items worth monitoring closely, such as meat and vegetables.
In the case of meat, there remains room for potential upside on price inflation, but this will be temporary.
The key factors to consider are that, at the start of the year, consumer demand was improving, and abattoirs capitalised on this improvement by raising prices. This continued for some time.
Moreover, there was panic buying after the announcement of the foot and mouth disease. We also temporarily blocked Brazil’s poultry imports due to an outbreak of avian influenza.
But these fundamentals have shifted. The slaughtering has resumed in some major feedlots that were affected by foot-and-mouth disease. Again, when we have foot and mouth disease, our exports are blocked temporarily, leading to an increase in the domestic meat supply.
In the case of poultry, the ban on Brazil’s poultry imports has been lifted. This is all to say, if we see meat elevated, we will know when the data is out, it may be the tail-end effects of these issues.
In the case of the vegetables, the weather impact affected the supplies a bit in some areas. But if one has been observing volumes in various Fresh Produce Markets, things are normalising well.
Another product that saw an increase in June was oils and fats, primarily linked to increases in the global vegetable market, partly because of the strong global demand for palm oil. We expect the decent local sunflower seed crop to help ease any concerns about supplies in the local market in the coming months.
On the positive side for the consumer, many of the above factors may be temporary. Importantly, we have ample domestic summer grain and oilseeds, and a good fruit harvest, all of which bode well for moderating food price inflation. It is on this basis that last month, I signalled an optimistic view of moderating food price inflation in 2025.
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