South African food (and non-alcoholic beverages) inflation decelerated slightly last month, in both year-on-year (y-o-y) and month-on-month (m-o-m) terms, the Bureau for Food and Agricultural Policy (BFAP) has reported. In its latest Food Inflation Brief, the think tank noted that y-o-y food inflation in April had been 6%, while the m-on-m figure had been 0.7%. (In March, y-o-y food inflation was 6.4% and m-o-m food inflation was 0.9%.) Food inflation contributed one percentage point to the country’s consumer price index headline inflation figure of 5.9%.
The increasing food inflation was largely driven by international factors. These included the Russian invasion of Ukraine, and the consequent sanctions imposed on Russia. Ukraine and Russia were both major food and feedstock exporters, and their exports had been severely disrupted. Russia was also a major energy exporter and again these exports had been disrupted.
But China's zero-Covid policy has also had a disruptive effect. And bad weather in the US has delayed the planting of summer grains and oilseeds, another factor in driving up their prices. These developments have been exacerbated by a palm oil export ban imposed by Indonesia and a wheat export ban imposed by India.
“These persistent increases in agricultural commodity prices globally have filtered into the South African market, supporting high prices amongst major grains and oilseeds, despite the expectation of another bumper crop, which should ease any concerns around availability and ensure that commodity prices continue to trade at export parity levels,” stated the BFAP in its report. “Global factors also contributed to rising meat prices, notably the continuation of intermittent Avian influenza outbreaks and supply constraints emanating from a prolonged period of high feed prices.”
However, domestic factors also pushed South African meat prices higher. Thus, feed prices in the country surged, while slaughter volumes declined: in y-o-y terms, cattle slaughters in March were 10% down. Concern about foot and mouth disease also reduced the use of cattle feedlots during this period. More generally, South African agriculture has suffered from above-inflation electricity price rises for some time now.
In terms of global comparisons, the only market also monitored by BFAP which had lower y-o-y food inflation than South Africa last month was China, which reported a figure of 1.9%. The European Union recorded 8.64%, the US 9.4%, Kenya 12.2%, Brazil 13.5%, and Zambia 14.1%.
In South Africa, the food categories that recorded the highest y-o-y inflation in April were – oils and fats (21.2%), meat (8.5%), bread and cereals (4.8%), fish (also 4.8%), non-alcoholic beverages (3.9%), milk and cheese and eggs (3.7%), sugar and sugar-rich foods (3.5%) and vegetables (0.2%), while fruit recorded deflation of 0.7%. In m-o-m terms, the highest inflation was recorded for oils and fats (5.4%), followed by meat (1%), and then sugar and sugar-rich foods (0.9%), milk and cheese and eggs (0.7%), non-alcoholic beverages (also 0.7%), and bread and cereals (0.1%), while vegetables recorded zero inflation and deflation was experienced in the prices of both fish (down 0.1%) and fruit (down 1.3%).
Regarding specific food items, the following recorded y-o-y inflation above 10% last month (in the order given by the BFAP): starchy foods (pasta, wheat flour, noodles, samp), beef (offal, chuck), pork (chops), mutton and lamb (stew, offal), chicken (non-individually quick frozen portions, giblets), fish (fish fingers, frozen), vegetables (peppers, broccoli, potatoes), fruit (oranges, banana, pineapple) and fats and oils (peanut butter). Food items which experienced y-o-y inflation in April of between 6% and 10 % were (again in the BFAP’s order) starchy foods (baked goods, white bread), beef (fillet, mince, T-bone), pork (bacon, ham), fish (tinned tuna), dairy (fresh milk), vegetables (carrots, lettuce), fats and oils (margarine, sunflower oil), and granular sugar and sugar-rich foods.
The BFAP’s thrifty healthy food basket (composed of 26 food items from all food groups and designed to feed a family of two adults and an older and a younger child) increased in price, m-o-m, by R6 or 0.2%, and, y-o-y, by R156 or 5.3%. Assuming the family was earning two minimum wages, and receiving child grants and school feeding, the total price of this thrifty healthy food basket last month (R3 098) would have consumed 29.5% of their total income.