Food inflation bites hard, but may ease

The only good news about food inflation this week is the suggestion that it may be about to peak, bringing some relief to South African consumers in the months ahead.

The bad news is that, until prices decline, many consumers find food increasingly unaffordable and the poor, as always, suffer most.

While global food prices, as measured by the Food and Agricultural Organisation, have been dropping for nearly a year, in South Africa the reverse is true. This month, Stats SA reported that rising food prices were the main driver of another increase in the consumer price index. The numbers were analysed in the Food Inflation Brief from the Bureau for Food and Agricultural Policy (BFAP).

Distressing examples of the impact of high food prices are not hard to find. Reporting on widespread poverty, hunger and the threat of social instability, the Saturday Star quoted a Meals on Wheels executive as saying “A lot of children are turning to petty crime just to eat”.  The financial newspaper Business Day reported that, for some communities, even gizzards and chicken feet were now too expensive.

The opposition party the Democratic Alliance has repeated its call for the removal of 15% value added tax (VAT) from chicken, and a number of other basic foodstuffs. FairPlay has campaigned for VAT-free chicken since 2018.

The prediction that food price increases would slow has come from respected agricultural economist Wandile Sihlobo. He told Farmer’s Weekly that agricultural commodity prices – driven rapidly upwards by Russia’s invasion of Ukraine – were softening and South Africa’s currency was strengthening. Together these should bring food prices down in the next few months.

Sihlobo’s prediction was that food price inflation would drop later this year from the current 14% to around 7% to 8% on an annual basis. That’s still high, but only half as bad as it is at the moment.