South African food inflation decelerated in August
After four consecutive months of acceleration, South African food inflation decelerated in August, year-on-year (y-o-y), to 5.2%. In month-on-month (m-o-m) terms, there was even a slight deflation of -0.1%. These statistics were highlighted by the Bureau for Food and Agricultural Policy (BFAP) think tank, in its latest 'Food Inflation Brief' report.
For comparison, the y-o-y figure for Consumer Price Index (CPI) headline inflation in August was 3.3% (which also represented a deceleration, from 3.5% in July), while the m-o-m CPI headline figure was again -0.1%. Food inflation contributed 0.9 percentage points (ppt) to the y-o-y CPI headline figure, but 0.0 ppt to the m-o-m figure.
In terms of wider factors that affected agriculture and food prices, the rand appreciated by 1.7% against the dollar, y-o-y, and by 0.2%, m-o-m, in August. The CPI for “electricity and other fuels” was up 8.7%, y-o-y, but by 0.0%, m-o-m. The CPI for “fuel” fell by -5.7%, y-o-y, and by -0.8%, m-o-m.
The food categories and food items which saw the highest y-o-y inflation in August were meat (11.3%), vegetables (9.3%), fruits and nuts (8.6%), non-alcoholic beverages (NAB – 4.9%), oils and fats (4.8%), sugar and sugar-rich foods (4.1%), fish and other seafood (2.8%), and cereal products (1.5%), while dairy and eggs saw deflation of -1.1%. In m-o-m terms, those which suffered the highest inflation that month were NAB (0.8%), fruit and nuts (0.6%), oils and fats (0.5%), meat (0.4%), fish and other seafood (0.3%), and sugar and sugar-rich foods (0.2%), while dairy and eggs had zero inflation, cereal products had deflation of -0.3% and vegetables had deflation of -3.1%.
The commonly purchased food items with the highest y-o-y inflation, at above 20%, in August, were beef (stew, rump steak, brisket, chuck, sirloin, T-bone, mince, fillet) and carrots. Those with inflation less than 20% but greater than or equal to 10%, were apples, avocados, lettuce, instant coffee, mutton/lamb (stew, chops, leg, neck), and fruit juice concentrate. Those with inflation less than 10% but greater than or equal to 5% were Ceylon tea, pumpkin, polony, peppers, beef offal, fish fingers, pork (ribs, chops, bacon, ham), various baked goods, maize meal, hake, cheddar cheese, mushrooms, sugar-rich foods, and individually-quick-frozen chicken portions. (In all cases, these foods items have been listed from highest to lowest inflation.)
Those foods which had y-o-y deflation in August were (in the BFAP’s order) wheat flour, white rice, brown bread, white bread; mutton/lamb offal, whole fresh chicken; potatoes, sweet potatoes; canned baked beans; and ultra-high temperature treated milk, fresh milk, Gouda cheese and eggs.
The cost of the BFAP’s thrifty healthy food basket (THFB) was R3 898 in August, which was a R127, or 3.4%, increase, y-o-y, but a R64, or -1.6%, decrease, m-o-m. The THFB is composed of 26 nutritionally-balanced food items from all food groups, and feeds a reference family of two adults, one older and one younger child, for a month. In August, it would have cost a low-income family 30.1% of its income (which was a smaller percentage than in July).
“Looking ahead, a stronger rand relative to the dollar continues to cushion the local market from rising international prices,” concluded the BFAP. “A positive summer crop outlook is helping sustain lower grain and oilseed prices y-o-y, which is expected to filter through to the cost of core staples and animal feed. On the livestock and meat front, animal disease outbreaks are currently supporting higher prices. However, as operations normalise, particularly in beef production, we anticipate improved supply and easing prices. In the coming months, key factors influencing the stability of food commodity prices will include the exchange rate movements, input costs such as energy and fuel, and the effectiveness of animal disease containment strategies.”
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