Christmas delicacies such as pap, eggs salad, baked goods and cold drinks will be more affordable this year as food inflation has plunged to its lowest in 14 years.
Data from Statistics South Africa (Stats SA) on Wednesday showed that the annual inflation for food and non-alcoholic beverages (NAB) witnessed another sharp decline in November, slowing to 2.3% from 3.6% in October.
The moderation came mainly from food prices, which slowed to 1.6% year-on-year in November, its lowest level since December 2010, when it stood at 1.6%.
Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa (Agbiz), said the sharp deceleration was partly attributed to base effects as food price inflation was particularly high a year ago.
“In November 2023, vegetable prices surged due to supply constraints from load-shedding disruptions, while the avian influenza outbreak constrained egg supplies and exacerbated meat price risks,” Sihlobo said. “This year, improved supply conditions have led to price deflation in both vegetables and meat.”
Sihlobo said another factor contributing to the slowdown was the normalisation of grain prices.
“Last year, India’s rice export ban caused a spike in global rice prices, but the resumption of exports this year has eased pressure. Lower wheat prices have also helped moderate grain-related product prices,” he said.
Despite the encouraging trend, Sihlobo cautioned that some risks remained though ample global wheat and rice harvests for the 2024/25 season could cushion the impact of rising maize prices.
“While we highlight these risks, the outlook is somewhat comforting.
The potential recovery of agriculture in 2025 because of the expected La Niña rains will help to keep food inflation contained,” he said.
Stats SA’s chief director of price statistics, Patrick Kelly, said eight of the 11 food and NAB groups registered lower rates.
These included vegetables; milk, eggs and cheese; hot beverages; bread and cereals; cold beverages; meat; sugar, sweets and desserts; and the miscellaneous category ‘other’ food.
“The annual rate for bread and cereals moderated further, cooling to its lowest level in almost three years.
Important items such as brown bread, white bread, maize meal, cold cereals, pasta and rice recorded lower rates,” Kelly said.
“The annual milk, eggs and cheese inflation declined to its lowest level in almost five-and-a-half years. After burning a hole in households’ food budgets for much of 2024, egg inflation descended into deflationary territory in November, falling to -3,7%. This is down from a high of 39,9% a year ago.”
However, Kelly said inflation quickened for several products, including samp and hot cereals. Fish inflation was flat, while oils and fats and fruit recorded steeper price increases.
Investec economist Lara Hodes said this was in line with movements in the Food and Agriculture Organization of the United Nations (FAO) Vegetable Oil Price Index, which averaged 164.1 points in November, rising 11.4 points (7.5%) month-on-month to reach its highest level since July 2022.
“Indeed, South Africa is a price taker for most agricultural food commodities,” Hodes said.
Cape Times