Food inflation has been on a long decline after peaking at more than 9% in November 2022. It was at 4.6% in June and then reduced slightly to 4.5% the following month, according to StatsSA. Food inflation remained just below overall inflation, as measured by the consumer price index (CPI), which was down to 4.6% from 5.1% in June.
While economists believe the lower inflation levels will lead to an interest rate cut in September, agricultural economist Wandile Sihlobo told Business Day that food inflation might be about to pick up.
He said that while there had been a moderation in most food product prices, there had been increases in bread, cereals and meat due to supply constraints resulting from the midsummer drought affecting maize production.
Sihlobo warned that those price increases could lead to a slight uptick in food inflation in the coming months. But he believed the impact would be tempered by stronger global production of wheat and rice and a firmer rand, which could keep imported food costs in check.
The Bureau for Food and Agriculture Policy (BFAP) believes an increase is unlikely. In its July food inflation brief, the organisation says food inflation has moderated significantly this year.
“Considering agricultural commodity price movements, as well as the appreciation in the value of the Rand in recent weeks, another expected decline in fuel prices and generally weak consumer demand, food inflation is not expected to increase in the near term.”
