http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 17.81Change: 0.17
R/$ = 15.84Change: -0.03
Au 1236.12 $/ozChange: -17.63
Pt 957.50 $/ozChange: -5.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters About Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Jan 28, 2011

The impact of higher food prices on South Africa’s inflation remains highly uncertain

Back
Agriculture|Africa|Export|Africa|Products
Agriculture|Africa|Export|Africa|Products
agriculture|africa-company|export|africa|products
© Reuse this



The food price index rose to 215 points in December 2010, statistics released by the Food and Agriculture Organisation (FAO) of the United Nations show, with food commodity price indices having risen for sugar to 398 points, for oils and fats to 263 points, and cereals to 238 points.

In fact, up for the sixth month in a row and fuelled by increases in these food commodity price indices, the FAO index was at it highest level, in nominal terms, since records began in 1990, topping the high of 213,5 in June 2008 – a period characterised by food riots in some countries. Potentially compounding matters was an associated poll by the agency, which showed that oil would rise to a higher average of over $86/bl this year, which could further spur food inflation.

But what is the likely impact on food prices in South Africa?

Agri South Africa (Agri SA) economist Dawie Maree says that it is likely that food price inflation will increase this year, since the prices of most of South Africa’s food products are derived from international prices.

Agri Africa member and former National Agricultural Marketing Council chairperson Professor Eckart Kassier nots that the country has moved from being a net exporter to a net importer of food, which could make the country vulnerable. At the moment, the price sting has been lessened by the stronger rand, but the rebound in the currency has also hurt farmers and their exports.

But local exports and imports and their prices will be affected by the international food commodity prices and food price indices, depending on the magnitude of the inter- national price increases. Imports will become more expensive, which could mean that more locally produced produce is sourced, to the benefit of local producers, Maree says.

He adds that export earnings might also increase as prices increase, although a strong rand would counteract the benefit. However, this is dependent on the economic recovery of South Africa’s trading partners, of which the European Union is the largest, he says.

During 2010, South African consumers were not significantly affected by the sharp rise in global commodity prices, perhaps mainly owing to the strength of the rand, says Nedbank economist Carmen Altenkirch.

“More recently, there has been a more notice- able increase in some food prices at consumer level but overall food inflation still remains very low. However, if global agricultural prices continue to rise, or even remain at their current levels, they will begin to have a more noticeable impact on domestic inflation, particularly if the rand weakens,” she adds.

Investec analyst Annabel Bishop has argued that interest rates would likely remain unchanged in 2011, with a slight possibility of one more cut in rates, at best. However, this is assuming that food and demand pressures, in general, remain subdued.

Bishop warns that the benign consumer price index outlook could be influenced by certain food price pressures that could occur in the next year owing to current poor weather conditions. “If the late rains and patchy weather conditions continue to negatively affect crops, there is likely to be greater than currently expected upward food price pressure in 2011, while the year’s economic demand is expected to pick up to 3,6% year-on-year, compared with the previous 2,8%,” she said.

Altenkirch agrees that a food price increase is likely to put some upward pressure on consumer inflation, but says that it is unlikely to cause the Reserve Bank much concern. As a result, even with a slight uptick in consumer inflation, Nedbank believes that interest rates will remain unchanged this year and well into next year.

Edited by: Martin Zhuwakinyu
Creamer Media Senior Deputy Editor
© Reuse this

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here
 
Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other News This Week News
WIDENING FLEXIBILITY The trailers have a 3-m-wide (2-file) and 4.3-m-wide (2-file) configuration
Lifting, transporting, installing and ballasting solutions provider Ale has expanded its global fleet of trailers and invested in the latest range of widening trailers that can be mechanically widened from 3 m to the desired width for any project. Ale ordered 48 axle...
The market for the BMW 7 Series in South Africa differs quite significantly from the rest of the world. China, the US and the Middle East almost exclusively buy the long-wheel-base version, using the German manufacturer’s luxury high-end sedan as a chaffeur-driven...
January new-vehicle sales fell by 6.9%, to 48 615 units, compared with the same month last year. Statistics released by the Department of Trade and Industry show that the domestic new passenger-car market declined by 6.1%, to 34 936 units, compared with 12 months ago.
More
 
 
Latest News
Updated 3 hours ago The Competition Tribunal on Friday gave a conditional go-ahead for mobile operators Cell C, MTN and Vodacom to buy out their respective subscriber bases, as South Africa’s last independent service provider Altech Autopage calls it a day. The Allied Electronics...
Updated 4 hours ago The drought in Southern Africa could become one of the worst on record should the current below-normal rainfall continue, the United Nations (UN) World Food Programme said this week. The El Niño conditions presently being experienced in the region had resulted in a...
Updated 4 hours ago Kelibone Masiyane has been appointed the new MD of PPC Zimbabwe, succeeding Njombo Lekula, who had recently been redeployed as MD of PPC’s international operations. Masiyane would be supported by new PPC commercial director Iain Sheasby and new PPC GM of finance...
More
 
 
Recent Research Reports
Construction 2016: A review of South Africa's construction industry (PDF Report)
Creamer Media’s Construction 2016 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; key participants; local demand; geographic diversification; corporate activity; black economic...
Energy Roundup – February 2016 (PDF Report)
The February 2016 roundup covers activities across South Africa for December 2015 and January 2016 and includes details of a Government Gazette notice that confirms Cabinet’s decision to move ahead with the 9 600 MW nuclear procurement programme; State-owned power...
Energy Roundup - December 2015 (PDF Report)
The December 2015 roundup includes details of State-owned utility Eskom’s application to claw back R22.8-billion; South Africa’s ranking as an investment destination for renewable energy; and a nuclear expert’s thoughts on reactor designs for South Africa’s nuclear...
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
 
 
 
 
 
This Week's Magazine
WIDENING FLEXIBILITY The trailers have a 3-m-wide (2-file) and 4.3-m-wide (2-file) configuration
Lifting, transporting, installing and ballasting solutions provider Ale has expanded its global fleet of trailers and invested in the latest range of widening trailers that can be mechanically widened from 3 m to the desired width for any project. Ale ordered 48 axle...
The market for the BMW 7 Series in South Africa differs quite significantly from the rest of the world. China, the US and the Middle East almost exclusively buy the long-wheel-base version, using the German manufacturer’s luxury high-end sedan as a chaffeur-driven...
January new-vehicle sales fell by 6.9%, to 48 615 units, compared with the same month last year. Statistics released by the Department of Trade and Industry show that the domestic new passenger-car market declined by 6.1%, to 34 936 units, compared with 12 months ago.
Information technology (IT) equipment and infrastructure multinational Dell is providing open infrastructure systems for clients so that they can use any systems, including innovative new systems, that suit their business needs, says Dell Europe, Middle East and...
South Africa’s State-owned defence industrial group, Denel, has set up another international partnership, based in Hong Kong. This new subsidiary is Denel Asia and it is a joint venture (JV) with South African private sector company VR Laser.
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $149 Close
Subscribe Now for $149