Households under pressure as food inflation rises in November, a four-month high

Coffee lovers are now paying double-digit increases for their wake me up hot beverage. Photo: File

Coffee lovers are now paying double-digit increases for their wake me up hot beverage. Photo: File

Published Dec 14, 2023


Not only are instant coffee lovers paying double-digit increased for their wake me up hot beverage, South African households are continuing to to take strain as annual inflation for food and non-alcoholic beverages accelerated to a four-month high of 9.0% in November this year - its highest level in four months.

This was from 8.8% in October.

Statistics South Africa (StatsSA) yesterday released the data as it said annual consumer inflation eased to 5.5% in November, down from a five-month high of 5.9% in October.

For all those coffee lovers, StatsSA noted the price index for hot beverages rose by 11.4% in the 12 months to November.

“Apart from August 2023, the annual inflation rate for instant coffee has occupied double-digit territory since March 2022,” Stats SA said.

The recent Avian influenza outbreak knocked chicken and egg prices, disrupting the poultry market at large. Egg prices were almost 40% higher year on year in November. The annual rate for individual quick-frozen (IQF) chicken was 7.3% higher in November, up from 5.5% in October. Non-IQF frozen chicken recorded an annual increase of 9.1% in November.

StatsSA also said potato prices continued to heat up, increasing by 64.4% in the 12 months to November.

Fruit products recorded an annual hike of 11.5% in November, the highest reading since December 2020.

The annual print for sugar, sweets and desserts was 18.5% up from October’s 17.6%.

However, annual inflation for bread and cereals slid for a seventh consecutive month, edging lower to 8.5% from 8.8% in October.

Daneel Rossouw, Nedbank Commercial Banking's head of Sales for Agriculture, said food inflation affected all household budgets, especially the lower income group as they spent a greater share of their income on food.

“In a cycle of higher interest rates the impact of food inflation is amplified as this makes up the bulk of household spending,” Rossouw said.

Rossouw said, “It is important to note that South Africa has an open economy and is thus also impacted by world markets, Geopolitics and global developments besides our domestic challenges namely impact of load shedding and rail/port infrastructure. It is also clear that seasonality plays a big role in food availability and prices.”

Rossouw said the major factors impacting on food inflation were avian influenza that had a major impact on the poultry supply chain from September this year, fruit supply tapered off after the end of the citrus season as well as limited potato supply due to mostly climatic conditions.

“However, the poultry industry is showing signs of improvement and hopefully prices will normalise in the coming months. Furthermore the constraints in the ports for fruit exports could also support an increase in domestic market volumes with easing prices.”

Wandile Sihlobo, Agricultural Business Chamber (Agbiz) chief economist, said the product prices underpinning this increase in food inflation were mainly milk, eggs and cheese; fruit; vegetables; and sugar, sweets and desserts.

“If we dive into details, avian influenza was the main issue behind the egg supply constraints, which remain a challenge although not as acute as we saw in September and October.

“But with interventions underway in the poultry sector, such as importing fertilised eggs to rebuild the parental bird stock lost from avian influenza, importing table eggs (powder and liquid eggs that would help in the baking process and free the whole eggs for human consumption), and the ongoing processes about the possible vaccinations to curb the spread of the disease, we are hopeful that the prices will likely normalise in the coming months,” Sihlobo said.

Eggs had a lower weight within the food inflation basket, at 0.4%, which meant that their impact might not be as pronounced in an overall inflation figure.

Regarding fruits, he said the slight price uptick was mainly because of supply moderation after the citrus season. He said there would soon be a recovery in the supply as deciduous fruit harvest gained momentum. “Moreover, the constraints in the ports for exports could also mean that we will likely see a slight increase in domestic market volumes, thus slightly easing prices.”

Regarding vegetables, which remain elevated, Agbiz said potatoes were the main culprit in the basket as the harvest was limited, following quality challenges caused by irrigation disruptions in some fields due to load shedding in much of the year's first half.

“We expect a similar recovery in vegetables in the coming months, which will help ease the current upside price pressures. The load shedding has reduced somewhat, and farmers have invested in alternative energy sources, which is helpful for production conditions.”

Sihlobo said overall, they remained optimistic that South Africa's consumer food price inflation would moderate this year, although significant risks were worth monitoring.