Power cuts boost food prices

The BFAP’s food inflation brief for September showed food inflation at 8.1%, compared to the consumer price index of 5.4% that month.

The two inflation measures diverged sharply following Russia’s invasion of Ukraine in March 2022, which resulted in worldwide increases in grain, fertiliser and fuel prices.  South African food inflation shot up to nearly 14% earlier this year, while CPI remained in the 6% to 7% range.

The two are converging again as food inflation drops with the decline in world grain prices. The continuing gap is because of local factors. While global dynamics are helping to bring South Africa’s food prices down, local pressures are keeping them up.

The BFAP says that “domestic factors such as load shedding continue to drive food inflation, both directly through additional costs in the chain, and indirectly through its influence on the supply of irrigated commodities”.

In the domestic meat market, poultry and pork prices moved contrary to international trends, given the weak exchange rate. Poultry prices were slightly higher (1.4%) for the second consecutive month and up by 16.8% year-on-year, reflecting persistently high input costs and the weaker exchange rate. 

“Poultry prices could increase further in coming months, as the full effect of the current widespread Avian Influenza (AI) outbreak starts to manifest in markets. This impact is expected to be stronger in egg prices where an estimated 5 million layers have been culled, and it is more difficult to supplement domestic availability through imports,” the BFAP said.