South African food prices are going to remain high because of its electricity problems and the declining value of its currency, according to the independent Bureau for Food and Agricultural Policy (BFAP).
In its latest Food Inflation Brief, looking at prices in January 2023, the BFAP said the depreciating rand kept food prices from falling as they had elsewhere in the world, while the power cuts, known as loadshedding, pushed prices up all along the food value chain.
Loadshedding also helped weaken the rand, and its additional costs for food producers could offset the marginally softer agricultural commodity prices.
“Load shedding remains a major risk that will likely see food prices in South Africa remaining higher for longer,” the report said.
Over the past year, food price inflation accelerated steadily to 13.4% in January, while consumer price inflation (CPI) peaked in July 2022 at 7.8% and has since dropped to 6.9%.
The BFAP says the January figure is the highest food inflation rate since May 2008 and more than double the upper inflation target limit.
The main contributors to food price inflation in January were bread and cereals (up 21.8% over a year), oils and fats (up 18.5%), vegetables (up 14.3%), meat (up 11.2%), dairy and eggs (up 10.9%), non-alcoholic beverages (up 10.3%), sugar rich foods (up 9.3%) and fruit (up 3.6%).
South Africa’s food price inflation of 13.4% in January was lower than the European Union (17.8%) but higher than Kenya (12.8%), Zambia (11.6%), Brazil (11.1%), the US (10.1%) and China (6.2%).