The warnings keep coming that South Africa’s very low food price inflation will not last much beyond the end of this year.
The reasons are the continuing war in Iran, which is pushing up fuel prices, and the expected arrival of the El Nino weather phenomenon, which will not only bring hotter and drier conditions this summer, but is predicted to be the strongest in living memory.
If that proves correct, drought conditions are looming, grain harvests will shrink, and food inflation will surely follow.
For the moment, food inflation has dropped steadily, reaching the lowest level since 2010, as the Bureau for Food and Agricultural Policy (BFAP) reports in its latest Food Inflation Brief.
In July, the annual rate of food inflation dropped to 0.9%, from 1.6% in June. This is far lower than national headline inflation, which was down to 4.3% from a two-year high of 5% the previous month.
The BFAP attributed the decline to lower prices for agricultural commodities (South Africa is enjoying record grain harvests) and lower meat prices following price spikes due to outbreaks of foot and mouth disease.
“Food commodity prices are expected to remain relatively moderate in the coming months.
“However, the predicted El Niño weather cycle remains a risk going into the 2027 season, particularly on planting activity and summer crop production. In addition, higher fuel and fertiliser costs due to the prolonged Middle East conflict will impact production and distribution costs, placing upward pressure on food prices over the medium term.
“Nevertheless, high stock levels accumulated over the previous two bumper seasons should help cushion some of these potential price increases,” the BFAP concluded.
