Food price inflation could pick up over the next few months due to an anticipated recovery in meat prices, an agricultural economist has said.
Yesterday, data released by Statistics SA indicated that food price inflation – the rate at which food prices increase over time – increased to 2.8% year-on-year in May, after stagnating at 2.3% for four consecutive months.
But for consumers the projected increase may not immediately be felt, depending on individual food prices.
These increases, according to Agbiz chief economist Wandile Sihlobo, were broad-based across the food basket, with the exception of fruit, vegetables and sugar prices, which slowed somewhat from April.
While the rate of food price increases has been at its lowest this year since peaking at about 12% in 2017, the next few months could see a faster pace.
Meat prices have been stable for the past few months because of the challenges to the industry posed by foot and mouth disease. This led to lower export numbers, which usually drive up the price of meat domestically.
According to the Bureau for Food and Agricultural Policy’s overview of the first quarter, beef exports dropped to 4,000 tons, compared to 6,600 tons in the same period in 2018.
In March, there was a slight increase when 1,790 tons were exported.
According to Sihlobo, meat exports are expected to make a recovery over the next few months.
This means the relatively lower meat prices, which have been keeping the food basket stable, are expected to pick up pace, taking the food price inflation rate to a projected 4% by the end of the year.
“That huge increase [in food price inflation] leading up to 2017 was on the backdrop of the 2015- 2016 drought,” said Sihlobo.
“When we had good harvests in 2017, including a record maize harvest, there was a recovery in agricultural production and inflation began to decelerate, bringing us into 2018 and 2019 lower levels.
“The slight increase [in food price inflation] over the past month was driven in part by the increasing grain-related food prices in the backdrop of dry weather conditions across central and western parts of the country, leading to a poor grain harvest.”