Food price inflation continues to drop, both globally and locally.
Global food prices measured by the United Nations Food and Agricultural Organisation (FAO) have been on the decline since peaking as a result of Russia’s invasion of Ukraine. The FAO’s food price index dropped throughout 2023, and was down a further 1% in January 2024.
South African food prices are collated by the independent Bureau for Food and Agricultural Policy (BFAP) and published monthly in its food inflation brief. The latest, for December 2023, showed food inflation down to 8.5% from 9% the previous month.
Food inflation remains above consumer inflation, which is also on the decline. The consumer price index (CPI) dropped to 5.1% in December.
The BFAP said local poultry prices increased by only 0.2% in December, a period of strong festive season demand, and there were no shortages of chicken on the local market, despite the impact of bird flu.
Looking ahead, the report said world grain prices were rising and there were concerns about the El Niño weather phenomenon, which can bring high temperatures and lower rainfall in the region.
“Given strong surpluses in maize production in recent years, domestic prices are largely driven by world market dynamics and the exchange rate.
“Predictions of a strong El Niño and late onset of rains in the summer production regions did raise initial concerns as to the size of the 2024 crop, but most areas were planted, albeit a bit late, and better conditions through January have improved market sentiment,” the BFAP said.
