South African food inflation stayed below upper target limit for 13th straight month, in March
South African food and non-alcoholic beverage (NAB) inflation – hereafter to be referred to just as food inflation, for brevity – decelerated slightly in year-on-year (y-o-y) terms in March, the Bureau for Food and Agricultural Policy (BFAP) think tank has noted in its latest 'Food Inflation Brief' report. Y-o-y food inflation in March was 2.7%, whereas the equivalent figure for February had been 2.8%. Both figures were well below the upper target inflation limit of 6%. March was the thirteenth month in a row in which y-o-y food inflation was below the upper target limit.
Y-o-y headline consumer price index (CPI) inflation in March was also 2.7%. Food inflation contributed 0.5 percentage points to the CPI figure.
March saw the South African rand appreciate against the US dollar by 3.1%, y-o-y, from R18.87:$1.00 to R18.29:$1.00. There was also a month-on-month (m-o-m) appreciation of 1.1%. Again in March, South Africa’s CPI for “electricity and other fuels” was 11.9% y-o-y and 0.1% m-o-m. CPI for “fuel” was -8.8% y-o-y and -0.4% m-o-m.
In terms of food categories, those that recorded the highest y-o-y inflation in March were fruits and nuts, and NAB, both of which experienced rates of 7.9%. Then came fish and other seafood, at 4.9%, sugar and sugar-rich foods (4.6%), cereal products (4.3%), vegetables (3.3%), oils and fats (2.2%), dairy and eggs (0.6%) and meat (0.4%).
The commonly bought food items that saw high y-o-y inflation in March were (in the order and categorisations of the BFAP) fruit juice concentrates, which recorded inflation equal to or above 20%. Those food items which experienced inflation equal to or greater than 10%, to just under 20%, were maize meal; cabbages, carrots, lettuce; bananas, apples; dried beans; and, instant coffee, and Ceylon/black tea. Those with rates equal to or greater than 5%, but less than 10%, were various baked goods; mutton/lamb (chops, neck, stew, leg); ham; fresh and frozen hake; mushrooms, sweet potatoes; pears; amageu (a traditional South African beverage); and, mineral water/spring water, Rooibos tea.
Those commonly purchased food items which registered y-o-y deflation in March (again, in the BFAP’s order and categorisations) were pasta, wheat flour, white rice; beef (brisket, chuck); pork (bacon, ribs, chops, fillet); sausages (beef, pork, mutton); chicken (fresh portions, whole fresh, giblets); onions, potatoes, pumpkin; oranges; canned baked beans; sour milk, fresh milk; and, eggs.
The cost of the BFAP’s Thrifty Healthy Food Baske (THFB) in March was R3 909. This was a 3.4%, or R127, increase, y-o-y, and a 0.5%, or R20, increase, m-o-m. The THFB is composed of 26 nutritionally-balanced food items from all the food groups and is designed to feed a reference family of two adults and one older and one younger child, for a month. Buying the THFB in March would have a cost a low-income family 31.5% of their total income. This was fractionally worse than in February, when it would have cost them 31.4%.
“Food inflation pressure is expected to rise modestly in the coming months, driven by concerns associated with the policy direction of the new US government and potential impacts on the exchange rate,” stated the BFAP. “With the National Treasury’s decision to rescind the proposed increase in value added tax, consumers are no longer faced with the possibility of additional pressure for items outside the zero-rated basket. Moreover, the anticipated rebound of the new summer crop harvest will provide relief to livestock producers through lower feed costs and ease the cost of core staples for consumers. On the meat and dairy side, animal disease outbreaks remain a critical factor to monitor, given their potential impact on supply and prices.”
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