South African month-on-month food inflation high a six-year high in August

2022-10-01 21:13:12 By : Mr. Hyman Ye

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South African month-on-month food inflation hits a six-year high in August

29th September 2022 By: Rebecca Campbell Creamer Media Senior Deputy Editor

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South African food and non-alcoholic beverage (NAB) inflation surged 1.8% in month-on-month (m-o-m) terms in August, the Bureau for Food and Agricultural Policy (BFAP) has reported in its latest “Food Inflation Brief”. This is the highest m-o-m increase since April 2016, or in more than six years. In year-on-year (y-o-y) terms, food and NAB inflation jumped 11.3% in August, and contributed 1.9 percentage points to the consumer price index headline inflation figure that month of 7.6%.

As usual, the inflation figures varied widely between the different food categories. In y-o-y terms, inflation last month was led by oils and fats, at 37.6%. These were followed by bread and cereals at 17.8%, then vegetables (9.3%), meat, and fish, and sugar and sugar-rich foods (all at 9.2%), NAB (8.9%), and milk and cheese and eggs (8.2%), although fruit recorded deflation of 1.4%. In m-o-m terms, it was bread and cereals that led the way, at 3.1%, followed by vegetables (2.3%), NAB (2.2%), milk and cheese and eggs (2.1%), sugar and sugar-rich foods (1.2%), oils and fats (1.1%), meat (0.7%), and fish, and fruits (0.6% each).

Individual food items with y-o-y inflation last month of more than 10% were, in BFAP’s order and categorisations, fats and oils (vegetable oil, margarine), vegetables (beetroot, tomatoes, onions, cucumber, tinned mixed vegetables, pumpkin, frozen vegetables), beef (offal, T-bone, brisket, corned beef, chuck), NAB (Ceylon tea, coffee, fruit juice), fruit (avocados, oranges), starch-rich foods (brown bread, wheat flour, instant noodles, white bread, pasta, sweet potatoes, cereals), legumes (tinned baked beans, dried beans) pork (ham), sugar-rich foods (sweets, chocolates), dairy (milk) and fish (canned pilchards). Those food items which recorded y-o-y inflation between 6% and 10% were pork (bacon), chicken (frozen chicken portions which were not non-individually quick frozen), mutton and lamb (neck), sugar-rich foods (white sugar, brown sugar), dairy (powdered milk, yoghurt, sour milk), fruit (pineapple), beef (mince, stewing beef, fillet), peanut butter, and vegetables (cabbage).

The price of the BFAP Thrifty Healthy Food Basket (THFB) increased by 0.3%, or R9, m-o-m, and by 11%, or R331, y-o-y. The THFB is composed of 26 nutritionally balanced food items from all the food groups and is designed to feed a family, of two adults and one older and one younger child, for a month. Assuming that family earned two minimum wages, received child grants and benefitted from school feeding, in August the THFB would have cost them 31.2% of their total income – up from 31.1% in July.

Bread and cereal, and oils and fats, inflation were largely driven by the same factors: high global prices, underpinned by hot and dry conditions in much of the northern hemisphere. In South Africa, the situation was exacerbated by a declining exchange rate, increased load-shedding (programmed power cuts), increasing global interest rates and fears of a global economic deceleration. Red meat price rises were the result of reduced slaughter numbers and, for beef, continuing high feed prices, increased risks of disease, and economic pressures on consumers. Poultry prices were being pushed by, again, high feed costs and a weakening exchange rate, plus high global prices (caused partly by disease outbreaks in key producing regions).

“Over the next three months, we see bread and cereals inflation remaining high due to global price dynamics and weakness in the rand,” reported the BFAP. “Lower oil prices could however translate into a slight easing in manufacturing and distribution costs, whilst a slowdown in meat prices could further alleviate some of the inflationary month-on-month pressures. However, we expect year-on-year inflationary pressure on red meat prices to remain high. This is likely to keep food inflation above 7% for rest of the year.”

Edited by: Creamer Media Reporter EMAIL THIS ARTICLE      SAVE THIS ARTICLE ARTICLE ENQUIRY

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