South Africa’s food inflation remained below overall CPI inflation in May

In May, for the third consecutive month, South African food and non-alcoholic beverage (NAB) inflation, hereafter simply referred to as food inflation, was lower than overall inflation. of the consumer price index (CPI). reported the Bureau of Food and Agricultural Policy (BFAP) in its latest Food Inflation Brief report. YoY (year-on-year) food inflation was 4.7% last month, while headline CPI inflation was 5.2%. In monthly (mom) terms, both rates were effectively stable, each increasing by just 0.2%. Food inflation contributed 0.9 percentage points (ppt) to the year-on-year headline CPI inflation figure, and 0.03 ppt to the monthly figure.

Regarding input costs for the food sector, in May the CPI for “electricity and other fuels” increased by 15.3% year-on-year, but by zero percent, Mom. The CPI figure for “fuel” increased by 9% year-on-year and 1.9% year-on-year. But, for the first time in several months, the rand appreciated against the dollar, instead of depreciating. In annual terms, the rand appreciated by 3.4%, from R19.07:$1.00 in May 2023 to R18.42:$1.00; in monthly terms, the appreciation was 2.4%, from R18.88:$1.00 in April to R18.42:$1.00 in May.

“Exchange rate depreciation for much of 2023 contributed crucially to sustained high food inflation, but the value of the rand strengthened significantly in June this year,” BFAP highlighted. “This follows an improvement in sentiments following the election results, which marked the start of South Africa’s first governing coalition since the dawn of democracy. Markets have reacted positively to the formation of the National Unity Government and although key factors such as ministerial positions are yet to be finalized, a stable partnership in this regard could lead to further exchange rate appreciation, further reducing inflation.

The list of infrastructure challenges in the sector established by the BFAP once again omits any reference to load shedding, which has not existed for three months. But he now lists challenges related to municipal services, ports and water infrastructure.

The food categories that experienced the highest inflation in May were: sugar and sugar-rich foods (15.5%), NAB (7.8%), vegetables (7.6%), dairy and eggs ( 7.5%), fruits (6%). fish (4.8%), bread and cereals (3.9%) and meat (0.7%). Oils and fats experienced an annual depreciation of -2.3%. In maternal terms, the ranking was as follows: sugar and sugar-rich foods (1.1%), NAB (0.9%), fish (0.8%), bread and cereals (also 0.8%), dairy and eggs (0.4%), oils and fats (again, 0.4%) and vegetables (0.3%). Meat saw a deflation of -0.2%, while fruit was -6.6%.

The report lists commonly purchased food items that experienced high year-on-year inflation rates in May (the order and categorization were those of the BFAP). Those with inflation of 30% or more were papaya; and Ceylon/black tea and instant coffee. Those with inflation of 20% or more but less than 30% were rice, potatoes, frozen chips; oranges; white sugar, brown sugar; and condensed milk. Those with inflation of 10% or more but less than 20% were frozen chicken portions, eggs; fish fingers, hake; powdered milk, whiteners; tomatoes, apples; peanut butter, dried beans, peanuts; and fruit juices and rooibos tea.

The most commonly purchased foods that saw year-on-year declines in May were (as BFAP listed them) cornmeal, white bread, pasta, cereal/porridge; beef (chuck, T-bone, minced, tenderloin, rump, sirloin); pork (chops, bacon); mutton/lamb (leg, rib chops, stew); whole fresh chicken; sour milk, prepared custard, cheese, crème fraîche; carrots, onions, sweet peppers, spinach, pumpkin, beetroot, canned mixed vegetables; bananas, pineapple; sunflower and canola oil; and foods high in sugar.

In May, the cost of the BFAP Healthy and Thrifty Food Basket (THFB) increased by R366, or 4.5%, year-on-year, and by R40, or 1.1%, mum. The THFB consisted of 26 nutritionally balanced foods, from all food groups, and was designed to feed a reference family of two adults, one older child and one younger child, for one month. Purchasing the THFB in May would have cost a modest family 31.1% of their income, which represents a deterioration compared to April, when the THFB would have cost them 30.7% of their income.

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