South Africa’s consumer food inflation decelerated in January 2024

South Africa’s consumer food inflation decelerated in January 2024

South Africa’s consumer food inflation slowed to 7,0% in January 2024, from 8,5% in the previous month. This was underpinned by the deceleration across most food products, except for the sugar, sweets and desserts.

We expect this broad moderation path to continue in 2024 for most of the products within the food basket, assuming that domestic agricultural conditions improve and South Africa gets a decent summer grain and oilseed harvest.

While the summer grain and oilseed 2023/24 production season started favourably, with farmers planting roughly 4,4 million hectares, up by 0,4%, the production conditions have increasingly become worrying.

Since the start of February, the rain has been scant across the summer crop-growing regions of South Africa, thus raising concerns about the potential yield loss of the crops. In various areas, significant summer grains such as maize, sunflower seed, and soybeans are in the pollination stages this month. The crop should ideally have higher moisture levels during this pollination stage to boost yields. However, the crop enters this growth stage with limited moisture across the major growing regions.

These current weather conditions have raised fears about the possible yield loss. The consensus in the sector is that the last two weeks of February and the first week of March are critical for the crop. This means South Africa must receive widespread rains this week or next week for the crop to recover from its current worrying state.

Regarding meat, a significant upside risk to food inflation in the past few months, the supplies seem to have recovered after the widespread avian influenza in 2023 that sparked concerns. The recovery in poultry production follows a range of interventions that the industry and the government embarked on at the end of last year.

These include importing fertilized eggs to rebuild the parental bird stock lost from avian influenza, importing table eggs, and improving biosecurity control measures. Another additional policy measure the government has is easing the poultry product imports in the event of supply constraints, which we do not anticipate over the foreseeable future.

The fruit and vegetable prices, which also increased notably at the end of 2023, will likely continue to slow in the coming months as the volume of products increases in various Fresh Produce Markets. Unlike field crops, the horticulture industry is under irrigation and thus benefits from improved dam levels in the current dry spell and high temperatures in various regions.

Also worth noting is that international agricultural commodity prices continue to decelerate from the higher levels we saw a year ago because of expected decent global grains and oilseed harvest. This deceleration further supports our optimism about the potential continuous slowing of domestic food inflation.

For example, the FAO Food Price Index, which measures the monthly price changes of agricultural commodities, fell by 1% in January 2024 from its December level and is 10% lower than a year ago.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

SA food prices likely to moderate in 2024

SA food prices likely to moderate in 2024

Food prices were a significant discussion point worldwide in 2023. South Africa had a fair share of elevated food prices in the first half of 2023, and the pace of increases slowed somewhat towards the end of the year.

The December 2023 consumer food inflation data showed further deceleration to 8,5% in December 2023, from 9,0% in the previous month (and against market expectations of a slight uptick to 9,3%). The product prices underpinning this deceleration were primarily bread and cereals, oils and fats, and vegetables.

At the Agricultural Business Chamber of South Africa (Agbiz), we expect this moderation path to continue in 2024 for most of the products within the food basket.

The significant risk to meat supplies that animal diseases such as avian influenza presented in 2023 could ease this year. There will likely be a recovery in poultry production following a range of interventions that the industry and the government embarked on at the end of last year.

These include the importation of fertilized eggs to rebuild the parental bird stock lost from avian influenza, importing table eggs (powder and liquid eggs that would help in the baking process and free the whole eggs for human consumption), and the ongoing processes of the possible vaccinations to curb the spread of the disease (although there remain some delays with approvals of some vaccines by the authorities). Evidently, over the festive season, we did not notice any recorded shortages of poultry products.

Another additional policy measure the government has in addressing potential shocks on poultry meat supplies is enabling poultry product imports in the event of supply constraints, which we do not anticipate over the foreseeable future.

Moreover, the fruit and vegetable prices, which remained elevated towards the end of 2023, will likely slow notably in the coming months because of the estimated increase in the volume of products that are in season in the various Fresh Produce Markets across South Africa.

The supply constraints in some vegetables last year, mainly potatoes, were caused by the bad harvest. We expect improvement in 2024, regardless of the reports of pepper ringspot virus in a few potato farms in the northern regions of South Africa.

Notably, while we are in an El Niño period, the weather conditions have been quite favourable across South Africa. The agricultural conditions are excellent, and we believe that farmers planted the intended area of 4,5 million hectares for the 2023/24 season, up 2% y/y.

We expected favourable yields across the country, even in the North West, where rainfall has not been as high as in other regions of South Africa. This week, 30 January, South Africa’s Crop Estimates Committee will release the preliminary planting data to show whether farmers planted the area they intended to plant.

At the Agbiz, we are optimistic that farmers planted this area. Moreover, crop yields will likely be broadly excellent with favourable rainfall across the country since the season started. What is vital is for farmers to receive ideal rain in February, a pollination period that is key to yield development.

This potentially improved domestic agricultural supplies and a generally sizeable global harvest bodes well for continuously moderating consumer food price inflation in 2024.

At the international level, the figures from the Food and Agriculture Organization of the United Nations already show continuous moderation in agricultural commodity prices. For example, the FAO Food Price Index, a monthly agricultural commodity price index, eased at 118.5 points in December 2023, down 2% from its November level and 10% year-on-year.

This decline was underpinned by the easing price indices for sugar, vegetable oils and meat. This declining price trend could continue in the coming months if the positive global crop yield prospects hold.

Ultimately, food prices in 2024 may not be as major an issue as they were the previous year, assuming that risks such as energy prices and shipping routes are not majorly disrupted for a prolonged period by the ongoing geopolitical tensions. Domestically, the agricultural production conditions are promising and signal continuous moderation in prices.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

SA food inflation accelerated in November 2023

SA food inflation accelerated in November 2023

I imagine most South Africans are already enjoying their well-deserved summer holiday. But I thought it would be helpful to take some time and reflect on the recent inflation data release, specifically the food category.

South Africa’s consumer food inflation quickened to 9.0% in November from 8.8% in the previous month. The product prices underpinning this increase were mainly milk, eggs, cheese, fruit, vegetables and sugar, sweets and desserts.

If we dive into details, avian influenza was the main cause of the egg supply constraints, which remain a problem although not as acute as we saw in September and October.

But with interventions underway in the poultry sector, such as importing fertilised eggs to rebuild the parental bird stock lost from avian influenza, importing table eggs (powder and liquid eggs that would help in the baking process and free the whole eggs for human consumption), and the ongoing processes about the possible vaccinations to curb the spread of the disease, it is hopeful that the prices will probably normalise in the coming months.

Furthermore, the eggs have a lower weight within the food inflation basket, at 0.4%, which means their effect may not be as pronounced in an overall inflation figure.

Regarding fruit, the slight price uptick was mainly because of supply moderation after the citrus season. There will soon be a recovery in the supply as deciduous fruit harvest gains momentum. Moreover, the constraints in the ports for exports could also mean that we will probably see a slight increase in domestic market volumes, thus slightly easing prices.

Regarding vegetables, which remain elevated, potatoes were the main culprit in the basket. The harvest was limited by quality problems related to irrigation disruptions in some fields because of load-shedding in much of the year’s first half.

A recovery in vegetables is expected in the coming months, which will help ease the current upside price pressures. Load-shedding has reduced somewhat, and farmers have invested in alternative energy sources, which is helpful for production conditions.

Overall, we remain optimistic that South Africa’s consumer food price inflation will moderate in 2024, although significant risks are worth monitoring, such as the recent increases in grain prices and uncertainty about the weather outlook.

Still, the weather forecasters continue to paint a comforting view that El Niño in the 2023-24 summer crop season will have a mild effect on the sector and thus keep production at decent levels and, by extension, bodes well for food prices. There are good soil moisture levels across South Africa following several rainy seasons. Furthermore, the weather forecast remains reasonably favourable for the year, with El Niño expected to intensify from March 2024.

The prices of most agricultural products are also influenced by global developments because South Africa is an open economy interlinked with the world markets. Therefore, monitoring global agricultural developments, geopolitics, and energy markets remains essential.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

Food prices in South Africa

Food prices in South Africa

Food inflation has been topical over the past few months, and South Africa saw double-digit levels from mid-2022 to mid-2023.

This was not unique to South Africa but a global phenomenon underpinned by various factors, including drought in South America; China’s strong demand for grains and oilseed; higher energy prices and the Russia-Ukraine war.

Positively, from March 2023, South Africa’s consumer food price inflation began to slow, from 14,4% at that time to 8,0% in September 2023. The product prices underpinning the deceleration throughout this period were primarily bread and cereals; meat; fish, and oils, and fats.

But October 2023 disrupted the six-month consecutive decline, with consumer food inflation having quickened to 8,8% from 8% the previous month. The product prices underpinning this increase were mainly milk, eggs, cheese, fruit and vegetables.

Still, I believe the recent rise in the price of these products will probably be a temporary blip. They are a reaction to brief supply constraints in the past few months.

The avian flu was the main issue behind the egg supply constraints, which remain a challenge although not as acute as we saw in September and October.

Regarding vegetables, potatoes were mainly the driver of the prices in the basket as the harvest was limited following quality challenges caused by irrigation disruptions in some fields due to load-shedding in much of the year’s first half.

But with interventions underway in the poultry sector, such as importing fertilised eggs to rebuild the parental bird stock lost from avian flu, importing table eggs (powder and liquid eggs that would help in baking processes and free the whole eggs for other consumption), and the ongoing discussions about vaccinations to curb the spread of the disease, I am hopeful that the prices will normalise in the coming months.

Furthermore, eggs have a lower weight in the food inflation basket, at 0.4%, which means their impact might not be as pronounced in an overall inflation figure.

I expect a similar recovery in vegetable and fruit supplies in the coming months, which will help ease the current upside price pressures. Load-shedding has reduced somewhat, and farmers have invested in alternative energy sources, which is helpful for production conditions.

Overall, I remain optimistic that South Africa’s consumer food price inflation will return to a moderating path going into 2024. Some products that will probably drive such a price trend include grain-related products, as well as fats and oils.

Farm-level grain and oilseed prices remain lower than a year ago because of improved global and domestic supplies, notwithstanding the trade risks. This is one of the catalysts behind the slowing price of grain-related products and fats and oils and the expected favourable trend for the coming months.

Notably, these are products with a higher weighting in the food basket. Favourably, meat price inflation has also continued to slow. However, given the anticipated festive season demand and potential small price increase, the meat price trend could slightly change over the festive season months.

Also crucial for the food inflation outlook going into 2024 is highlighting that El Nino’s forecast in the 2023/24 summer crop season is another aspect to keep an eye on, although we remain optimistic that it will have a mild impact on the sector and thus keep production at decent levels and, by extension, sustain moderating food prices.

There are good soil moisture levels across South Africa following several rainy seasons.

Furthermore, the weather forecast remains reasonably favourable for the year, with El Nino expected to intensify from March 2024.

Farmers are busy planting across the country, and they hope the area planted with summer grains and oilseeds will increase from a year ago.

Still, the prices of these products are influenced by global developments as we are an open economy interlinked with the world markets. So, monitoring global agricultural developments, geopolitics, and energy markets remains essential.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

SA food prices likely to moderate in 2024

South Africa sits pretty in Sub-Saharan Africa food security stakes

On October 16 we celebrated World Food Day, commemorating the founding of the UN Food & Agriculture Organisation in 1945. This day is also an opportunity for countries to reflect on their food security conditions and efforts to boost agricultural production.

This column will therefore revisit an issue discussed a year ago in these pages: food security conditions in SA. One of the measures researchers use to evaluate the food security condition of each country relative to the world is The Economist’s global food security index.

In 2022 SA ranked 59th out of 113 countries in the index and was the most food secure country in Sub-Saharan Africa. This was an improvement from a ranking of 70th in 2021. We ranked the second most food-secure country in Africa after Morocco.

The index comprises four subindices: food affordability, food availability, food quality and safety, and sustainability and adaptation. The affordability and availability subindices carry a combined weighting of two-thirds of the total index. The affordability subindex includes the change in average food costs, agricultural trade, food safety net programmes, proportion of population under the global poverty line, and funding for food safety net programmes.

The availability subindex includes the sufficiency of supply, access to inputs, agricultural research & development, farm infrastructure, supply chain infrastructure, food loss and political and social barriers to food.

In 2022 SA experienced a mild deterioration in the food affordability subindex. Meanwhile, the rest of the subindices improved significantly. This decline in the affordability subindex is unsurprising as the country has witnessed a broad acceleration in consumer food price inflation since the start of the year.

Food inflation

SA’s consumer food price inflation averaged 9.5% year on year in 2022, up from 6.5% in 2021. Food inflation was also elevated in the first half of 2023, with only the second half showing moderation. In the first eight months of this year food inflation averaged 12.2%.

The higher food inflation in the past months was a global challenge. In an environment such as SA, with high unemployment, the effects of food inflation shocks tend to be felt more severely by consumers.

Over the past few years several factors have added to upward pressure on global food prices. The drought in South America, a major grains and oilseed-producing region, from the 2019/20 season reduced the harvest notably, worsening the grain price increases from 2020 to end-2022.

China’s imports of grains and oilseed as the country was rebuilding its pork industry after a devastating African Swine Fever outbreak added to the surge in demand while global stocks were tight.

As Covid-19 spread in early 2020, several major grain producers worsened global price increases by temporarily banning exports. Shipping costs also soared. These challenges were further worsened by the Russia-Ukraine war.

As a small, open economy SA was not insulated from these global agricultural and food price shocks.

A major issue to remember when observing international agricultural indices such as the global food security index is that subjectivity can never be fully eliminated from the authors’ judgment. Resource constraints can hinder objective data collection on the ground in each country, and they sometimes rely on blueprint models that may not be site-specific.

Sources of bias can stem from inconsistency in data quality, frequency and reliability across all countries. The weightings and rankings are also tricky because they must be tailored to different socioeconomic contexts.

SA is in a relatively good place regarding food security compared to most other countries. Still, we should continue to strive to improve food security through agricultural production and job creation expansion.

Ideas for expanding agriculture and agro-processing were well established as far back as in the National Development Plan of 2012.

Written for and first appeared in Business Day.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

South Africa’s consumer food inflation slightly moderated in September 2023

South Africa’s consumer food inflation slightly moderated in September 2023

South Africa’s consumer food inflation slightly slowed to 8,0% in September 2023 from 8,2% in the previous month. The product prices underpinning this deceleration are mainly bread and cereals; oils and fats; sugar, sweets and desserts; and vegetables. Our view of the path forward remains unchanged from what we have consistently communicated over the past few months.

While there are renewed risks in global and agriculture, such as India’s decision to ban specific categories of rice exports and the Black Sea Grain Deal Initiative that facilitated grains and oilseeds exports from Ukraine terminated, and domestically, the avian flu, we are still optimistic that South Africa’s consumer food inflation will continue to slow throughout the year into 2024.

The spreading of avian influenza has mostly affected Gauteng, Mpumalanga, Free State, Limpopo and North West. Over a hundred primarily commercial facilities have reported avian influenza cases. There are reported losses in parental stock for breeders of layers and broilers.

In response to the challenge, the Department of Agriculture, Land Reform and Rural Development, along with poultry producers and retailers, are exploring a range of instruments to respond to the current crisis. These include the containment measures currently being implemented by industry and government to control the spread of the disease. Regarding the egg supply constraints, the industry is working on importing fertilized eggs to rebuild the parental stock lost from this disease and import table eggs (powder and liquid eggs that would help in the baking process and free the whole eggs for human consumption). There are also ongoing processes about the possible vaccinations to curb the spread of the disease.

There is anecdotal evidence of various retailers that have adjusted egg prices significantly to manage the demand. Such price adjustments in a short period have raised concerns about the possible impact of the current avian influenza on food inflation. What will matter a lot is the duration of these higher prices, which we doubt will persist for an extended period if the interventions of imports and control of the spread of the disease we listed above succeed. The current increases could be a temporary blip, which will likely show on one-monthly inflation figures, and the trend would then continue to the expected path we were on before, which is deceleration or sideways.

Also worth noting is that eggs have a lower weighting within the food inflation basket, at 0.4%, which means its impact may not be as pronounced in an overall inflation figure. Poultry products, which have a slightly higher weighting of 2,09%, have not increased at the retail level as significantly as eggs. Given that the poultry products supply is still relatively good and various trade measures are under consideration, there should not be supply constraints over the foreseeable future.

Beyond the poultry developments, the products that could underpin the slowing food inflation trend will likely remain similar to those in the past few months, specifically grain-related products, fats and oils and fruit and vegetables.

Within the vegetable side, however, we may see temporary price increases in potatoes due to quality issues and lower volumes in some regions. Such price shocks are already visible in some Fresh Produce Markets nationwide. Given the anticipated demand and potential slight price increase, the meat price trend could slightly change ahead of the festive season.

Regarding the “bread and cereals” product prices, admittedly, the Black Sea Grain Deal challenges and India’s rice exports ban are an upside price risk. With South Africa importing a million tonnes of rice and similarly exposed to wheat imports, the disruption in trade of these commodities and the length of it could have implications on global price and, ultimately, South Africa’s “bread and cereals” component of the food inflation basket. Still, we have not seen material price changes in the grain prices so far, although there were price reactions after the announcements of both the Black Sea Deal and the India rice exports ban. Hence, we expect the prices of grain-related products in the inflation basket to maintain a softening path.

We had feared that the “oils and fats” products prices would start to increase and follow the global price trend, which showed an uptick in July. However, the recent data from the FAO shows continuous moderation. For example, In September 2023, the FAO’s vegetable oil price index was at 121 points, down 4% from August 2023 and 21% y/y. The decline in the global prices of palm, sunflower, soybean and canola oils underpinned this.

Beyond the global dynamics, South Africa has a favourable agricultural season. For example, the 2022/23 maize harvest is estimated at 16,4 million, 6% higher than the 2021/22 season’s harvest and the second-largest harvest on record. Soybean harvest could reach a record 2,8 million tonnes. Other field crops and fruits also provided decent harvests. These increased supplies support the slowing food inflation view we expressed.

Also crucial for the food inflation outlook going into 2024 is highlighting that El Nino’s forecast in the upcoming 2023/24 summer crop season is another aspect to keep an eye on, although we remain optimistic that it will have a mild impact on the sector and thus keep production at decent levels and, by extension, sustain moderating food prices. There are good soil moisture levels across South Africa following several rainy seasons. Furthermore, the weather forecast remains reasonably favourable for the year, with El Nino expected to intensify from January 2024.

Be that as it may, the prices of these products are influenced by global developments as we are an open economy interlinked to the world markets. So, monitoring global agricultural developments, geopolitics, and energy markets remains vital.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

South Africa’s consumer food inflation continued to slow in August

South Africa’s consumer food inflation continued to slow in August

South Africa’s consumer food inflation slowed to 8,2% in August 2023 from 10% in the previous month. The product prices underpinning this deceleration are similar to the previous month, mainly bread and cereals; meat; fish; oils and fats; milk, eggs and cheese; and vegetables. My view of the path forward remains unchanged from what we communicated last month.

In essence, I recently stated in these pages that while there are renewed risks in global agriculture, such as India’s decision to ban specific categories of rice exports and the Black Sea Grain Deal Initiative that facilitated grains and oilseeds exports from Ukraine terminated and domestically the increases in fuel prices, we are still optimistic that South Africa’s consumer food inflation will continue to slow throughout the year into 2024.

The products that could underpin the slowing food inflation trend will likely remain similar to those in the past few months. Notably, red meat prices, which have softened at the farm level, should continue on this trend at the retail level in the coming months. Fruit and vegetable prices should remain relatively affordable because of improved domestic supplies. We may, however, see temporary blips in the prices of products such as potatoes due to seasonality.

Regarding the “bread and cereals” product prices, admittedly, the Black Sea Grain Deal challenges, and India’s rice exports ban are an upside price risk. With South Africa importing a million tonnes of rice and similarly exposed to wheat imports, the disruption in trade of these commodities and the length of it could have implications on global price and, ultimately, South Africa’s “bread and cereals” component of the food inflation basket.

We are already seeing a surge in global rice prices. Still, we have not seen a material change in prices domestically, and there will be a lag between three to five months before these are apparent at the retail level.

What is essential to monitor is the extent of price changes and the duration of the current surge. Hence, we expect the prices of grain-related products in the inflation basket to maintain a softening path regardless of the recent disruption in grain prices. Notably, the softening in maize prices could also overshadow the increases in rice prices in the coming months.

I had feared that the “oils and fats” products prices would start to increase and follow the global price trend, which showed an uptick in July. But the recent data from the Food and Agricultural Organisation of the United Nations (FAO) shows a retraction. For example, In August 2023, the FAO’s vegetable oil price index was at 126 points, down 3% from July 2023 and 23% y/y. The decline in the global prices of palm, sunflower, soybean and canola oils underpinned this.

Beyond the global dynamics, South Africa has a favourable agricultural season. For example, the 2022/23 maize harvest is estimated at 16,4 million, 6% higher than the 2021/22 season’s harvest and the second-largest harvest on record. Soybean harvest could reach a record 2,8 million tonnes.

Be that as it may, the prices of these products are influenced by global developments as we are an open economy interlinked to the world markets. Other field crops and fruits also show prospects for decent harvest this season. These increased supplies support the slowing food inflation view we expressed.

Also crucial for the food inflation outlook going into 2024 is highlighting that El Nino’s forecast in the upcoming 2023/24 summer crop season is another aspect to keep an eye on, although we remain optimistic that it will have a mild impact on the sector and thus keep production at decent levels and, by extension, sustain moderating food prices.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

South Africa’s consumer food inflation decelerated in January 2024

What to make of the South African government’s concerns about higher food prices?

This past week, the South African government voiced concerns about the higher food prices and instructed the cabinet’s economic cluster to implement a food security plan to cushion consumers. We have yet to see the government’s strategy and approach.

But it is worth highlighting that South Africa’s consumer food price inflation has started to decelerate from the high levels of 14,4% we saw in March 2023. In July 2023, consumer food inflation was recorded at 10,0%, from 11,1% in the previous month. The product prices underpinning this deceleration in recent months are primarily bread and cereals; meat; fish; and oils and fats, which are crucial for low-income households.

Notably, as the cabinet’s economic cluster prepares to start its work, it is vital to have a common understanding of the key drivers of food prices in recent years and an appreciation that this is a global challenge, not unique to South Africa. For example, two primary drivers of global food prices existed before the covid-19 pandemic.

First, the drought in South America in the 2019/20 season reduced the harvest notably, primarily in Brazil and Argentina. These countries collectively account for 14% and 50% of global maize and soybean production. The drought has spread for roughly three seasons since 2019/20, further exacerbating the grain price increases from 2020 to the end of 2022.

Secondly, China’s continuous imports of grains and oilseed as the country was rebuilding its pork industry after a devastating African Swine Fever also added to the surge in demand at a period when global stocks were tight. China’s growing demand had a consequential impact on global grain prices because of its share size of imports — for example, the country imports about 60% of globally traded soybeans.

As covid-19 spread in early 2020, several major grain producers, such as India, Kazakhstan and Vietnam, worsened global price increases by temporarily banning exports. As this unfolded, shipping costs soared, increasing global grain prices. In sum, a combination of trade policy actions by other countries, logistics and weather conditions placed upward pressure on food prices.

These all-important fundamentals challenge food supplies, further worsened by the Russia-Ukraine war. Russia and Ukraine are substantial players in the grains and oilseeds market.

As a small, open economy, South Africa, interlinked with the world, was not insulated from these agricultural and food price shocks. Admittedly, South Africa was in a reasonably better place, with abundant supplies, as the La Niña weather event brought good rains across the country and supported agricultural activity. Still, the prices did not reflect the increased domestic supplies as the global shocks mainly underpinned them.

Over the period of higher global commodity prices, the food producers and processors had to deal with higher agricultural commodity prices and process such commodities further to produce the food products available at the retail level. The activities between the producer and retailer do not happen without costs, and time lag. The food value chain first depends on expansive logistical systems and networks, while processing involves labour, energy, packaging and finance costs. Once the food is processed, it must be distributed to retail outlets, bearing these costs. On top of that, we can add the dramatic costs of load-shedding and crime.

If food processors and retailers accounted for all these cost increases across the value chain, consumers would face a much sharper price increase. But this was not the case in South Africa. Food prices increased at a moderate pace (compared to other countries), averaging 9,5% in 2022, compared with 6,5% year on year in 2021. Countries like the US, Brazil, and the EU saw higher consumer food price inflation rates. This suggests that food processors and retailers if anything, absorbed some costs.

Notably, while the consumer food price inflation averaged 9,5% in 2022, the producer price inflation for agriculture at the same time was 15,0% and for food manufacturers at 12,3%. This further underscores the point that, if anything, the food manufacturers and retailers absorbed some costs.

These are all fundamental realities that need to be appreciated as the cabinet looks into the food price issues in South Africa. Thus, any policy response should be on the consumer side, without price interference.

Written for and first appeared in Business Day.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

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