South Africa's consumer food price inflation nudged up in April 2025
Published: 21/05/2025
South
Africa's consumer food price inflation accelerated to 3,3% in April, from
2,2% in the previous month. This increase was underpinned by the rise in
price inflation of most of the products in the food basket, but most
notably the cereal products, meat, oils and fats, and vegetables. This is
unsurprising and reflects the pass-through of the higher agricultural
commodity prices we observed at the end of last year and into the start of
2025, particularly with grains. In the case of meat, price increases are
expected as a response to the slight recovery in consumer demand, which we
have been highlighting in recent months. In the case of vegetables, we see
the increases as a reflection of disruptions in field work caused by the
excessive rains in recent weeks, which should be a temporary blip.
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- South
Africa's consumer food price inflation accelerated to 3,3% in April, from
2,2% in the previous month. This increase was underpinned by the rise in
price inflation of most of the products in the food basket, but most
notably the cereal products, meat, oils and fats, and vegetables. This is
unsurprising and reflects the pass-through of the higher agricultural
commodity prices we observed at the end of last year and into the start of
2025, particularly with grains. In the case of meat, price increases are
expected as a response to the slight recovery in consumer demand, which we
have been highlighting in recent months. In the case of vegetables, we see
the increases as a reflection of disruptions in field work caused by the
excessive rains in recent weeks, which should be a temporary blip.
- Looking
ahead, we suspect that the current mild quickening of food price inflation
will prevail for much of the year's second and third quarters as the
increases in the farm level of some of the key products, such as grains,
continue to pass through to the retail level.
- Grain
prices, while having softened recently, were elevated for much of the last
quarter of 2024 and into the start of this year because of the tight maize
stocks. There is generally a lag of three to five months before the
increases at the farmgate begin to show at retail levels. Thus, while
grain prices have now softened in anticipation of an ample harvest in the
2024-25 season, we will continue to see a different price direction in the
food inflation basket for months. Still, we don't anticipate that the
increases will be as sharp as the wheat and rice prices, which are other
key cereals that have generally seen prices softening in the past few
months.
- Regarding
vegetables, the recent price increases partly reflect some regions'
challenges with harvesting because of extra wet conditions. As such, we
expect the prices to normalize in the coming months. Importantly,
vegetables and fruits don't have a longer price lag than grains.
- In the
case of meat products, the price direction may soon change because of the
potential increase in domestic supplies. There is an outbreak of foot and
mouth disease, resulting in a temporary closure of some key export markets
and a likely rise in domestic red meat supplies. The counter factor to
this possible moderating trend could be poultry prices. South Africa
imports roughly 20% of its annual poultry consumption, and over two-thirds
of imports from Brazil. There is now an outbreak of avian flu in Brazil,
which could limit their poultry exports. Under such a scenario, the key
determinant will be whether South Africa can boost domestic supplies or
source additional imports from other regions. We suspect this may have
slight upside pressures. Still, we think meat price inflation may be
sideways to slowing. The recent uptick is unlikely to be a dominant trend
in the coming months.
- South
Africa's headline CPI was 2,8% in April 2025, down from 2,7% in March.