South African year-on-year (y-o-y) food and non-alcoholic beverage (NAB) inflation declined again in May, the Bureau for Food and Agricultural Policy (BFAP) has highlighted. It was 1.9% during that month, compared with 2.9% in April. South African Consumer Price Index (CPI) y-o-y headline inflation in May was 4.5% (which was an increase over the April figure of 4%). Food and NAB inflation contributed 8.9% of the y-o-y CPI headline inflation in May. (All these figures are from Statistics South Africa.) Y-o-y food and NAB inflation is thus trending down, while CPI headline inflation is trending up.

The food category with the highest y-o-y inflation in May was meat, at 7.3%. This was followed by NAB, at 4.9%, and then fish and seafood (3.6%), sugar (2.4%), oils and fats (1.7%), and dairy and eggs (0.9%). Cereals saw deflation of -1.4%, while the figure for vegetables was -6% and for fruits and nuts -8.5%.

However, within these categories, inflation varied widely from product to product. For example, within the meat category, the highest y-o-y inflation was for (in BFAP’s order) beef (offal, mince, sirloin, T-bone, fillet, rump) with inflation for these products ranging from 8.3% to 12.9%; pork (chops, fillet, ham, bacon) with a range from 9.1% to 19.4%; mutton and lamb offal, leg, and stew (7.3% to 13.5%); frozen but not individually quick frozen chicken portions (8.5%); boerewors (14.6%); and polony (8.2%).

In month-on-month (m-o-m) terms, the food category with the highest inflation in May was fish and seafood, at 1.4%. Next were oils and fats (1%), followed by vegetables (0.9%), dairy and eggs (also 0.9%), NAB (0.4%), and cereal products (0.2%). M-o-m, sugar and sugar-rich foods saw 0% inflation, while deflation was experienced by meat (-0.8%) and fruits and nuts (-3.3%).

The cost of the BFAP Thrifty Healthy Food Basket (THFB) came to R3 960 in May. This was a y-o-y decrease of -0.5%, or R20, but a m-o-m increase of 0.5% (R20). The THFB was composed of a nutritionally balanced energy-adequate combination of 27 food items from all the food groups, designed to feed a reference family of two adults and two children for one month. Assuming that the family received two minimum wages and two child support grants, the THFB would cost such as family 30% of its monthly income. However, if it received only one minimum wage, plus two child support grants, it would take 55.2% of the household’s income.

The BFAP now also has an Adequate Energy Food Basket (AE), composed again of 27 food items from all food categories, but only providing sufficient calories for survival of the same reference family, without adequate dietary diversity, also for a month. In May, it would have cost R1 216 (less than 33% of the cost of the THFB). Assuming the family had two minimum wages and two child support grants, the AE would take 9.5% of their total income. If the family received one minimum wage and two child support grants, the AE would take 17.4% of their income.

Internationally, the signing of a memorandum of understanding between the US and Iran, following their conflict, has caused both global oil and fertiliser prices to fall sharply, pointed out the BFAP.

“Food commodity prices [in South Africa] are expected to remain relatively moderate in the coming months,” forecast the BFAP. “Meat prices are likely to continue trending downward due to base effects, although the pace of decline will depend on the management of animal diseases such as foot-and-mouth disease, African swine fever, and highly pathogenic avian influenza, i.e. bird flu.”

The easing of crop prices would be supported by “ample” supplies of summer crops, and fertiliser and fuel prices were predicted to fall. On the other hand, the recovery in regional demand and the imminent El Niño phenomenon could decrease planting and the output of summer crops into next year, which could result in medium-term upward pressure on food prices. This could be mitigated by the current stock levels of grain.

“Although retail maize prices have softened in line with lower maize producer prices, elevated electricity and fuel costs in recent months have increased processing, packaging, storage, and distribution expenses across the value chain,” noted the BFAP. “This has widened the gap between retail food prices and farm-gate prices, not only on staples, but also on meat and vegetables.”