South Africa’s food inflation rate edged up in February, but remained lower than general inflation and below the government’s inflation target.
In its monthly food inflation brief, the Bureau for Food and Agricultural Policy (BFAP) said food inflation rose to 2.8% in February, from 2.3% the previous month. General inflation, as measured by the consumer price index (CPI), remained unchanged at 3.2%.
In February, year-on-year inflation on food and non-alcoholic beverages remained below the 6% upper limit inflation target for the 12th successive month, BFAP pointed out.
Looking ahead, it said food inflation pressure was expected to rise modestly in the coming months, driven by global uncertainties associated with the policy direction from the new United States government and potential impacts on the Rand exchange rate. Emerging market currencies such as the Rand tend to come under pressure when uncertainty in the global environment ramps up.
The National Treasury’s suggestion of gradually increasing value added tax (VAT) would also affect food prices in the long run for items outside the zero-rated basket.
“On a positive front, the new summer crop harvest is anticipated to moderate gains in food inflation, providing relief to livestock producers through lower feed costs and easing the cost of core staples for consumers,” BFAP said.
