Food price inflation still hits consumers hard

In its latest Economic Outlook, financial services firm PwC said South Africans saw the price of household goods skyrocketing, and faced longer queues and a lack of certain stock in stores across the country.

“Shopping has already become a nightmare for many consumers, with price checking and discount hunting taking top priority,” BusinessTech said in its report of the PwC consumer survey.

In its latest Food Inflation Brief, the independent Bureau for Food and Agricultural Policy (BFAP) said South Africa’s food inflation, which had been rising for almost a year, increased by a further 0.2 percentage points to 13.6% in February. This compared to consumer price inflation (CPI) of 7% that month.

“In February 2023 year-on-year inflation increased the most for bread and cereals, followed by fats / oils, vegetables and meat. Low year-on-year inflation of only 3.0% was observed for fruit.”

The BFAP report also showed that food inflation continues to drop around the world while it is rising in South Africa. The FAO Food Price Index (FPI), based on the prices of an international basket of food commodities, declined for the 11th successive month in February. 

In its outlook, the BFAP said food inflation might appear to moderate somewhat in March, because prices would be compared to a high base of March 2022.

“Looking ahead, an increase in administered prices such as electricity, due to be implemented in April, could further add cost pressures that would keep food prices elevated over the months to come.”

In their food price analysis in the Sunday Times, agricultural economist Wandile Sihlobo and Prof Johann Kirsten said the drivers of food prices were evident, and a global challenge.

“In the coming months, as the country faces rolling blackouts, which add to the dynamics, food prices are likely to remain elevated, softening in the second half of the year, and commodity prices will start to slow in the global environment,” they said.

In other words, more pain ahead, but maybe a bit less pain.