South Africa’s food and non-alcoholic beverages inflation has bottomed out and will begin an upward cycle in the coming months supported by an increase in agricultural commodities prices.

While South Africa’s headline food and non-alcoholic beverage inflation accelerated to 3.1% in March 2019 from 2.9% in the previous month, the food category remained unchanged at 2.3% for the third consecutive months

Another fuel price hike in March 2019 led to inflation hitting the midpoint of the Reserve Bank’s 3% – 6% target range.

Unexpected increases in inflation in the US and the UK, along with a record high nominal gold price, have put the prospect of inflation – and, for some, even stagflation – back on the table for economists, market analysts and central banks. 

South Africa’s food price inflation accelerated to 4.6% y/y in July 2020, from 4.5% y/y in the previous month.

My intention in this blog post is to briefly discuss South Africa’s food price inflation data for October 2020, which showed a sharp increase to a level last seen in August 2017.

Judging by recently reported indicators of global economic activity, this outlook is now being borne out.

It sometimes feels like there is little more to discuss regarding South Africa’s consumer food price inflation.

The data released by Statistics South Africa this morning shows that consumer food price inflation accelerated to 6,2% y/y in January 2022, from 5,9% y/y in the previous month. Fish, oils and fats, and vegetables are the primary products underpinning this uptick in the overall consumer food price inflation.

Similar to January 2022, major drivers of food inflation internationally include high agricultural commodity prices, resulting from challenging weather conditions, supply chain disruptions and rising energy prices exacerbated by the ripple effects of the Russia-Ukraine war.

Inflation is a process of sustained increases in the general price level over a period of time, typically 12 months.

Two years ago, with millions of people out of work and central bankers and politicians striving to lift the U.S. economy out of a pandemic-induced recession, inflation seemed like an afterthought.

With inflation rising to levels unseen in decades, households across the world are asking themselves how much more they can expect to pay for gasoline, groceries, and other necessities.

When analysing the composition of the basket of goods and services that form the basis for the calculation of the consumer price indices in South Africa and most of its key trading partners, these prices certainly stand out, as do some food prices.

South Africa’s seasonally adjusted GDP decreased by 0.7% in the second quarter of 2022. The biggest contributors to this contraction were agriculture, forestry & fisheries (-7.7%), followed by manufacturing (-5.9%), mining & quarrying (3.5%), construction (-2.4%) and trade, catering, and accommodation (-1.5%).

The surge in food and energy prices during the past few years has fueled inflation and hurt growth. 

The data released by Statistics South Africa on May 24 shows that consumer food inflation moderated at 14,3% in April 2023 from 14,4% in the previous month.

The South African Reserve Bank (Sarb) implemented the inflation target policy in 2000. An inflation target band of 3% to 6% was selected, and this target was based on what the Sarb thought at that time was an appropriate level of inflation to allow economic growth.

South Africa's consumer food inflation slowed in June 2023, recorded at 11,1% from 12,0% in the previous month.

South Africa's consumer food inflation continued to slow in July 2023, recorded at 10,0% from 11,1% in the previous month.