It seems likely that Mzansi’s consumers will have to fork out more for their food in 2022 as economists expect food price inflation to be quite significant in the new year.
After peaking at 7.4% year on year in August 2021 and then 6.7% in October, South Africa’s consumer food price inflation continued to moderate and soften to 6.0% in November.
The prices underpinning this deceleration in inflation are bread and cereals, meat, fruit and vegetables, Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa (Agbiz), explains.
For the first eleven months of the year, consumer food price inflation averaged 6.5% (compared to 4.6% year on year in 2020). The high prices of grains, vegetable oils and meat for much of the past few months were the primary drivers of this year’s food price inflation.
However, Sihlobo states that a number of food basket items are likely to remain expensive into the new year.
Meat remains the main driver
“Meat, which decelerated somewhat in November, along with oils and fats, will likely remain at fairly higher levels for some time, thus countering the potential decline in various products such as bread and cereals and vegetables,” he says.
For example, cattle slaughtering activity remains lower than in 2020, and this could provide mild upward pressures for meat price inflation in the near term. In September, cattle slaughtering was down 3% year on year, with 212 750 head slaughtered.
This could be ascribed to South Africa’s livestock industry still being in the herd-rebuilding process following the drought of 2015-16.
“Moreover, the excellent performance in crop production in the 2020/21 season may have helped provide some financial breathing room for some diversified farmers to rebuild herds rather than sell more meat to the domestic market.”
Additionally, Sihlobo says, the potential uptick in meat demand during the festive season might also add to the upward price pressures in meat.
Lastly, South Africa is a net importer of vegetable oils and fats, and these product prices have remained elevated in the global market.
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