Posted on May, 11, 2023 at 12:18 am
South Africans can breathe a sigh of relief as experts predict that food inflation is set to decelerate this year.
Consumers have been facing a tough economic climate, with inflation, interest rate hikes, and load shedding all taking their toll.
According to Stats SA, Consumer Price Inflation ticked upwards to 7.1% in March from 7.0% in February, despite many experts predicting a decline.
The 14.0% year-on-year increase for food and non-alcoholic beverages was one of the biggest contributors to the overall inflation rate, contributing 2.4 percentage points to the total.
The increase was the largest annual increase since March 2009 (14.7%).
In March, the sweets and desserts; fruits and vegetables; and the product category ‘other food products’ all saw massive upward inflationary pressure, while the milk, eggs & cheese product group saw its annual increase reach 13.6% from the recent 3.7% low in April 2022.
Consumers will have some respite as food inflation is expected to ease in South Africa.
“We expect the prices for a majority of food items to start decelerating in the next 12 months,” Dawie Maree, Head of Information and Marketing at FNB Agribusiness, told BusinessTech.
“Although prices may not drop entirely, food inflation is likely to decline.”
However, Maree said that FNB Agribusiness expects the prices for some foods to drop, such as grains, thanks to an excellent crop and the easing of international prices.
“We expect an easing on food inflation from the second half of the year, although it will be very much dependent on energy/fuel prices and possible price shocks on the international level, given the impact of the exchange rate. The probability of the latter is low at this stage.”
Despite the easing of food inflation, consumers should not expect an immediate easing in prices as businesses continue to feel the effects of load shedding.
“Businesses/retailers have absorbed a lot of the costs as a result of load shedding, but they will only be able to do so up to a certain point, and then these may likely be transferred to consumers. In that respect, we shouldn’t expect a respite in prices.”
“Retailers are already spending millions of rands on diesel just to keep their stores open during load shedding.”
Source: Business Tech