Food prices decrease globally, except in SA

The price of food on a global scale has seen a decrease as economies start to stabilise.

Global food prices have turned the corner and are now shrinking on a yearly basis and consumers across the globe have breathed a sigh of relief

Except in South Africa, of course.

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Food inflation in the country remains high (hovering at around 14%) and sticky and, if anything, has increased significantly over the last few months, as South Africans grapple under the pressure of it all.

Why is this? The simple answer is load shedding.

Load shedding poses threat to food security

According to Liandra da Silva from the Nedbank Group Economic Unit, the energy crisis has affected a number of sectors in adverse ways and now poses a threat to food security in the country.

Meat inflation has seen one of the biggest hikes, after it increased to 11.2% in January from December’s 9.7%.

The reason for this is down to the amount of capital outlay that has had to be put into generators and alternative energy generating systems, and then the purchasing of the fuel to run those systems – expenses which, in turn, falls on the customer.  

“We’ve experienced a lot of domestic shocks to the economic – but the biggest of them all has been the energy crisis. This has affected a number of sectors – but especially the food. Load shedding raises costs both directly and indirectly, through higher rates of wastage and spoilage, and the amount of money that goes into alternative energy sources,” she said at the Nedbank Roundtable discussion held on 20 February 2023.

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Situation not likely to ease soon

Da Silva does not expect the situation to ease anytime soon. She said that the SA economy was still facing three major challenges for the year ahead. These included the electricity shortage, high inflation and interest rates, and the global economic slowdown.

She said that Eskom’s electricity availability factor stands at 53% versus the global average of 86%, and as such, has hurt the economy’s main exporters, namely the mining and manufacturing sectors. She added that while the electricity reforms were  good on paper, their implementation headaches still persist.