While Statistics South Africa (Stats SA) on Wednesday said that annual consumer inflation eased to 5.5% in November, down from a five-month high of 5.9% in October, there was not so good news for inflation for food and non-alcoholic beverages.
The November annual consumer inflation was just below market forecasts of 5.6%, mainly driven by a significant decrease in fuel prices seen in the large petrol price cut of R1.78 a litre implemented last month.
However, Stats SA chief director for price statistics Patrick Kelly said consumer prices for food and non-alcoholic beverages accelerated to the highest level in four months to 9% in November from 8.7% in October.
Kelly said meat inflation crept up to 3.5% from 3.4% in October, though inflation for bread and cereals declined for a seventh consecutive month.
“The outbreak of avian flu continued to disrupt the poultry market. The annual rate for IQF (individual quick frozen) chicken was 7.3% in November, up from 5.5% in October,” Kelly said.
“Non-IQF frozen chicken recorded an annual rate of 9.1% in November.
Egg prices continued to boil, heating by a monthly 10.6%. This pushed the annual rate for eggs higher to 39.9% from 24.4% in October.”
Fruit products recorded an annual increase of 11.5% in November, the highest reading since December 2020 when the rate was 11.8%.
Nedbank economist Johannes Khosa said food prices would start to ease as the impact of the temporary supply shocks in the poultry industry fades.
“We forecast inflation to hover between 5% and 5.5% in the first half of next year before falling more convincingly towards the midpoint of SARB’s target range during the third quarter and averaging 5% in 2024,” Khosa said.
“However, the risks to our forecasts reside marginally to the upside due to the uncertainties surrounding the outlook for oil prices, food prices and the rand.”
Anchor Capital investment analyst Casey Delport also concurred that inflation would continue to moderate gradually.
However, Delport said the outlook faced significant upside risks, particularly regarding food prices.
“The emergence of the El Niño-Southern Oscillation (Enso), which typically implies below-average rainfall for SA, poses a risk of higher food prices.
“At the same time, renewed geopolitical tensions in the Middle East raise the risk of oil prices staying elevated for longer,” Delport said.
“Furthermore, the rand will face headwinds from the expected deterioration in the government’s fiscal position and growing uncertainty as the country enters a precarious political environment ahead of next year’s national election.”
With rocketing food prices, some Durban consumers said festive season family events would have to be more frugal affairs.
Sid Naidoo, from Chatsworth, said that he has a family of three and won’t be buying seafood, which is usually a staple for Christmas lunch.
“The price of food has increased significantly and I won’t be buying items such as crab, prawns and turkey. I am a pensioner and it’s difficult, we just have to manage with what we can afford.”
Vasie Archary from Phoenix said that she normally goes all out to spoil her family for the festive season.
“I like to prepare as many things as I can for Christmas, however the rising costs have made things difficult. I went shopping and there were so many food items that I left out because it was too expensive.
“Even things like biscuits, you either look for a very cheap option or just do without it. It’s definitely a very different festive season with food compared to other years.”
Weekly pricing from the Red Meat Producers Organisation indicates that there has been an increase in the price of different grades of beef since October.
The data indicated that from October 6 to December 8, A2/3 beef increased from R53.45 to R55.80 while C2/3 beef increased from R47.20 to R48.37 during the same period.
Professor Irrshad Kaseeram, from the University of Zululand’s Economics Department, said the fuel price rises, the depreciating currency over 2023 and the avian flu have resulted in food prices in a basket of goods rising between 20% (for more than 12 common food basket items) to 103% for potatoes.
“This is a huge constraint on all households. This is a bleak Christmas for most consumers because of the cost increases.”