South Africa's consumer food inflation likely to continue slowing

One would be forgiven for missing crucial economic data releases during the busy calendar of the BRICS summit in the week of 25 August in South Africa.

- Wandile Sihlobo

AGRIBUSINESS PERSPECTIVE

One example of such data was the inflation figures, which showed that South Africa’s headline consumer inflation fell to 4,7% in July 2023, the lowest since July 2021, from 5,4% in June. Notably, this was better than the market’s forecast of 4,9%.

The sharp fuel price deflation and easing food price pressures were some of the main drivers of this deceleration in headline inflation.

I particularly noticed the food category of the inflation basket, which had remained elevated over the past few months, a trend that we saw globally.

But the recent data paint a promising picture.

For example, South Africa’s consumer food inflation slowed in July 2023, recorded at 10,0% from 11,1% in the previous month.

The product prices underpinning this deceleration are primarily bread and cereals; meat; fish; and oils and fats.

SOME NEW RISKS 

While there are renewed risks in global agriculture, such as India’s decision to ban specific categories of rice exports, and the termination of the Black Sea Grain Initiative, which facilitated grains and oilseeds exports from Ukraine, we are still optimistic that South Africa’s consumer food inflation will continue to slow during this second half of the year.