(Phill Magakoe/Getty Images)
We are ending this year with food price inflation — the rate at which prices are increasing — cooling off to levels we have not seen in years.
For example, having stabilised at 4,1% in September 2024, consumer food price inflation slowed notably to 2,8% in October.
This is the lowest level since May 2019. The deceleration was broad — except for “sugar, sweets and desserts”, which lifted somewhat.
The slowdown was largely driven by base effects, as food price inflation was elevated this time last year. For example, this time last year, grain prices faced upward pressure after India’s rice export ban, while a bird flu outbreak constrained egg supplies, exacerbating price risks.
However, India has resumed rice exports, prices have slowed generally, and poultry product supplies have normalised.
Also worth noting is that the recovery in vegetable supplies across various fresh produce markets in the country added to the softening of prices. We had a brief period of elevated vegetable prices after the black frost in Limpopo, which damaged some potato fields. Fortunately, the supplies are recovering.
We suspect that the generally lower wheat prices have added to this moderation of prices. There are ample global wheat supplies, which has kept prices generally under pressure.
While having eased notably in October 2024, grain-related products remain the upside risk to consumer inflation following a poor crop harvest due to drought. For example, South Africa’s 2023-24 maize harvest is estimated at 12,72 million tonnes, down 23% year on year.
This sharp decline in harvest signifies the harsh impact of the 2024 mid-summer drought and the regions most affected were the white-maize growing areas, a staple crop that is also scarce in the world market. Thus, white maize prices have rallied in recent months.
An additional challenge is the demand for white maize from the Southern African region which will be felt in the first quarter of 2025.
That said, we don’t expect the potential grain-related product price increase to be substantial as the forecasts from the International Grains Council signal possible ample global wheat and rice harvests in 2024-25, which could cushion the region as substitutes.
Also worth noting is that South Africa is approaching a generally favourable agricultural season on the back of expected La Niña rains. Various regions have already started planting and have received a fair amount of rain which improved soil moisture.
In addition, optimistic farmers plan to plant a slightly bigger area for summer grains and oilseed. For example, the data released by the Crop Estimates Committee last month showed that they intend to plant 4,47 million hectares of summer grains and oilseeds in the 2024-25 season, up mildly by 1% from the previous season.
Overall, South Africa’s food price inflation has slowed notably and the forecasts for 2025 are generally favourable. The main risk in the near term is the higher grain prices, specifically for white maize, due to tight supplies following a poor 2023-24 harvest.
Still, this will be short lived and the new 2024-25 production season looks promising and should help slow food price inflation in the later months of 2025.
Wandile Sihlobo is an agricultural economist.