By Lloyd Phillips

Pressure on the economy means many South Africans have long struggled to feed their households adequately. The degree of relief produced by the decline in food price inflation since March 2023 should not be underestimated.

However, there is a possibility – however small – that this decline could reverse.

Wandile Sihlobo, chief economist at Agbiz, says July’s consumer food price inflation of 3,9% was the lowest since January 2020. “[It] was supported by the continued decline in price inflation for most products in the food baskets, except for the bread, grain and meat [categories].”

Although price increases in these categories threaten to reverse the decline in food price inflation, they are countered by the continued slowing of price inflation in oils, fats, milk, eggs, cheese, fruits and vegetables, mainly due to increased supply. The stronger rand has helped control the prices of vegetable oil imports.

The Bureau for Food and Agricultural Policy (BFAP) said the total value of its hypothetical food basket, costing R3 761, was R35 lower in July than in June.

The basket measures the cost of basic healthy eating habits for low-income households. However, the July 2024 basket cost R366 (10.8%) more than a year earlier.

Sihlobo says Agbiz believes the prices of bread and food grains may increase in the coming months. This is due to the impact of the midsummer drought on crop yields (especially maize) during the 2023-2024 production season and the resulting strong expected demand for summer grains in Southern Africa.

Although Agbiz expects meat price increases to remain moderate in the coming months, continued weak consumer demand for meat, especially red meat, will not be favourable for producers.

“In summary, we still believe that the possible upward price risks in the bread, food grain and meat categories in the coming months – due to their more significant weight allocation in the food basket – could change the direction of the overall food price inflation from moderate to a slight increase,” says Sihlobo.

Considering agricultural commodity price movements, the strengthening of the rand in recent weeks, another expected decline in fuel prices and general weak consumer demand, the bureau does not expect food price inflation to rise soon.

Inflation for food categories in July 2024

Category	Year on year inflation	Month on month inflation
Bread and food grains	5.6%	0.7%
Meat	1%	-0.4%
Fish	4.7%	1.4%
Dairy and eggs	6.4%	0.1%
Oils and fats	-0.1%	0.5%
Fruit	2%	-1.6%
Vegetables	3.4%	-1.7%
Sugar and sugar-rich foods	8.3%	0.4%
Non-alcoholic beverages	10.1%	1%