As if food is not already expensive in Mzansi, low-income households have to cough up an extra R380 per month to afford a basic healthy food basket. According to the Bureau for Food and Agriculture Policy (BFAP), this is more than what it was a year ago, and it expects food prices to rocket even further this year.
In its latest food inflation brief, BFAP said although the overall inflation rate in South Africa decreased modestly over the past six months, food inflation remained sticky. This is a result of several supply shocks in various agricultural commodity and livestock markets around the globe. These shocks have, in turn, also filtered through to the local market.
The word of the year in 2022 was “perma crisis”, which refers to the state of permanent shocks in which the world economy has found itself over the past two years, BFAP said.
While beef prices traded lower during January on the back of increased supply and reduced demand after the festive season, BFAP added, this could push food inflation for January 2023 to below 12% year-on-year.
“Extending further into 2023, global market dynamics, as well as local supply and demand dynamics, will be an important factor influencing South African food prices,” BFAP said.
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Load shedding adds to the pressure
Meanwhile, experts point to the second Brazilian maize crop to be a key global determinant of staple food price trajectories over the first half of 2023. As it stands, maize and soya futures markets are trading at export parity levels, which means South Africa is on track to produce maize and soya beans surpluses under current cropping conditions.
“This is, however, not the case with sunflower prices, which have increased sharply in the past few days. The market is factoring in fewer hectares planted to sunflower, which implies that local availability could become a cause for concern in the following months. This will influence sunflower oil retail prices.”
With the impact of load shedding on the economy and the food system, BFAP paints a gloomy picture for consumers.
Load shedding increases costs directly and indirectly through higher rates of wastage and spoilage within food chains, BFAP pointed out. Furthermore, financial results from several food companies indicate that fuel expenses to run generators during load shedding are skyrocketing.
“These costs cannot be absorbed in the chain and are largely passed on to consumers. In fact, we expect that load shedding will be a key factor that prevents South Africa from following the global trends of decreasing food price inflation during 2023,” BFAP said.
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