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Research body highlights surge in food inflation last month

27th September 2021

By: Rebecca Campbell

Creamer Media Senior Deputy Editor

     

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Last month saw higher food inflation than expected, the Bureau for Food and Agricultural Policy (BFAP) has reported. South African food inflation came to 6.9% in August (in year-on-year terms), continuing a rising trend that started in February. Last month’s food inflation was 0.2% higher than that for July. And food inflation contributed 1.2 percentage points to August consumer price index headline inflation. The figure of 6.9% was the highest recorded since 2017.

The price of the BFAP ‘thrifty healthy food basket’, for a family of two adults and two children, came to R2 939 last month. This was R7.24 higher than its cost in July, an increase of 0.2%. In year-on-year terms, the price increase was R142, or 5.1%. Assuming that the family was earning two minimum incomes as well as receiving child grants and school feeding for the children, the cost of this food basket would have amounted to 29.7% of total family income. (The BFAP thrifty healthy food basket is composed of a nutrionally-balanced mix of 26 food items, from all the food groups.)

Regarding food categories, the two which recorded the highest increases in inflation (in year-on-year terms) were oils and fats, at 21.3%, and meat, at 10.7%. From highest to lowest, the inflation rates for the other food categories were 6% for fish, 5.6% for vegetables, 5.5% for milk, cheese and eggs, 5.3% for sugar and sugar-rich foods, 3.5% for bread and cereals and 3.4% for non-alcoholic beverages, while fruit experienced deflation of 2.2%.

In terms of individual foods, no less than 11 recorded year-on-year inflation last month that was greater than 10%. These were (in the order given by BFAP) bananas, pumpkin, super maize meal, pork, breakfast cereals, wheat flour, frozen chicken portions, pasta, dried beans, margarine and plant oil. Another five foods experienced inflation between 6.9% and 10%, namely cabbage, polony, white sugar, mutton/lamb and beef.

In month-on-month terms, the inflation rates in August were 1.4% for vegetables, 1.1% for fish, 0.8% for meat, 0.7% for fruit. Oils and fats recorded no month-on-month increase at all, while milk, cheese and eggs experienced deflation of 0.6%, deflation for bread and cereals was 0.5%, for sugar and sugar-rich foods 0.4% and for non-alcoholic beverages, 0.2%.

“Main driving forces of food inflation continued to include high global commodity prices, exchange rate depreciation, animal disease outbreaks, rising input costs and the influence of the unrest in KwaZulu-Natal,” explained the BFAP. “Our view is still that food inflation will moderate towards the end of 2021. This is underpinned by two factors. The first is relatively high base effects, where upward price trends in selected food categories already started [in] mid-2020. The second is a moderation in meat prices as slaughter numbers pick up towards the end of the year, though it must be noted that seasonal demand also tends to increase over the festive period.” There is, however, “a crucial caveat” – rand foreign exchange rate fluctuations. A weaker rand could support higher food prices.       

Edited by Creamer Media Reporter

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