South African food inflation decelerated in December
After three consecutive months of moving up, South African food and non-alcoholic beverage (NAB) inflation (henceforth to be referred to simply as food inflation) decelerated again in December. This was highlighted by the Bureau for Food and Agricultural Policy (BFAP) in its latest 'Food Inflation Brief'. Food inflation in December came to 8.5%, in year-on-year (y-o-y) terms, which was 0.5 percentage points lower than its rate in November (9%).
Month-on-month (m-o-m) food inflation was actually deflation, of -0.1%. Food inflation contributed 1.5 percentage points to the y-o-y consumer price index (CPI) headline inflation figure of 5.1%. In m-o-m terms, food inflation contributed zero percentage points to the CPI headline inflation, which itself was 0%.
In y-o-y terms, the food categories which recorded the highest inflation in December were sugar-rich foods (17.9%), vegetables (17.5%), dairy and eggs (14.5%), fruit (11.6%), non-alcoholic beverages, or NAB (8.5%), bread and cereals (7.5%), fish (6.9%) and meat (3.9%). Oils and fats recorded y-o-y deflation of -5.9%. In m-o-m terms, the highest inflation was experienced by fruit (2.1%), followed by meat (0.9%), fish (0.6%), sugar-rich foods (0.1%) and NAB (also 0.1%). Four food categories saw m-o-m deflation: dairy and eggs (-0.2%), bread and cereals (also -0.2%), oils and fats (-1.1%) and vegetables (-3.5%).
The food items which experienced y-o-y inflation of 30% or more in December were (in BFAP’s order, groupings and categorisations) potatoes, sweet potatoes and pumpkin. Those with inflation equal to, or greater than, 20% but less than 30%, were rice, instant noodles, frozen potato chips; cauliflower, bananas, oranges, papaya, pineapples; eggs, frozen hake; Ceylon tea, instant coffee; and, sugar. Those foods which had inflation equal to, or greater than, 10% but less than 20% were beetroot, broccoli, mushrooms; apples, pears; fresh chicken portions, frozen fish fingers; gouda cheese, condensed milk, cheddar cheese; canned baked beans, peanut butter, peanuts; fruit juice; and soup powder. The food items that saw y-o-y deflation in December were white bread; canned mixed vegetables, onions, cucumber, lettuce, spinach; avocados; beef (sirloin, fillet, rump steak, T-bone, brisket, offal, mince, chuck, stew), mutton/lamb (stew, neck, leg); fresh cream; plant oils.
For South African agriculture, and the downstream food industry, as a whole, the continuing rotating scheduled power cuts imposed by national electricity utility Eskom, known as loadshedding, remained a persistent problem. As loadshedding disrupted irrigation, the indications were that it was one of the factors which led to a 9% decline in the volume of fruit and vegetables produced by South African farmers during last year (the result was that the value of local fruit and vegetable sales increased by 21%, owing to the sector’s sensitivity to lower production volumes). Other factors which drove up input costs were a 15.2% y-o-y increase in electricity and other fuel costs (although fuel itself saw y-o-y deflation of -2.5%) and the further depreciation of the rand against the dollar, by 8%, from R17.28:$1 in December 2022 to R18.67:$1 in December 2023.
The cost of the BFAP’s Thrifty Healthy Food Basket (THFB) increased, y-o-y, by 8.3% or R338, in December. However, in m-o-m terms it decreased by -0.2%, or -R6.46. The THFB is composed of 26 nutrionally-balanced food items from all the food groups. It was designed to feed a reference family of two adults, one older and one younger child, for a month. Assuming that family earned two minimum wages and benefitted from child grants and school feeding, it would cost the family 32.1% of its total income.
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