Food inflation has improved from 7.2% in January 2024 to 2.5% in December, compared with consumer price inflation that improved from 5.3% in January 2024 to 3% in December.

Although food inflation and CPI were both lower in November at 2.3% and 2.9%, respectively, and therefore increased in December, both indexes remained well below the upper limit of the inflation target of 6%.

Food inflation in South Africa peaked at 14% in March 2023 owing to high global commodity prices, high production costs and loadshedding.

From January to December 2024, the highest average year-on-year inflation among food categories were sugar and sugar-rich foods at 11.7%, non-alcoholic beverages at 8.7%, dairy and eggs at 7.2%, vegetables at 5.2% and bread and cereals at 5%.

The lowest average year-on-year inflation was observed for oils and fats at -1.7%, meat at 0.8% and fruit at 4.2%.

Other commonly bought food items with high year-on-year inflation rates in December were avocados, at more than 20%, mutton and lamb offal, cabbage, oranges, bananas, dried coffee beans and tea, all between 10% and 20%.

Overall, the highest inflation in 2024 was observed for rice, frozen potato chips, sweet potatoes, potatoes, papayas, oranges, apples, avocados, eggs, peanut butter, tea, coffee and white sugar.

The lowest inflation food items in 2024 were pasta, lettuce, onions, pumpkin, various beef, pork and lamb cuts, sugar-rich foods and sunflower oil.

The last quarter of the year saw increased inflation for maize meal, red meat, frozen fish, milk, various vegetables including spinach and tomatoes, tea and white sugar.

Decreasing inflation was observed for rice, bread, wheat flour, chicken, canned fish, cheddar cheese, eggs, peanut butter, margarine, apples, cabbage, carrots, sweet potatoes, coffee and tea in the fourth quarter.

The Bureau for Food and Agricultural Policy’s (BFAP’s) average cost of a thrifty healthy food basket amounted to R3 635 in 2024, which is 4.2%, or R139, higher than in 2023.

The basket considers the cost of basic healthy eating for low-income households in South Africa, comprising of two adults and two children for a month.

The highest value of the basket was observed in May last year at R3 852 per household per month.

After decreasing between May and July last year, the basket again increased from R3 761 in July to R3 833 by December.

Internationally, food commodity prices contracted by 2.1% from 2023, with cereal and sugar pricing having dropped by 10%, while vegetable oils, dairy and meat prices were higher by 10%, 5.8% and 2.7%, respectively.

By December, global wheat prices remained steady in December, with supply concerns in Russia offsetting downward pressure from weak global demand and improved harvests in Argentina and Australia. Maize prices have increased slightly, owing to stronger demand for Ukrainian exports and tighter US supplies.

In the local grains market, maize prices continued to climb in December, backed by a weakening exchange rate, stronger international prices and uncertainty about the 2025 planting season amid relatively depleted carry-over stock.

Global meat prices edged higher by 0.4% between November and December, reversing three months of declines. Locally, prices were higher owing to strong demand over the festive season and are also in line with global market and exchange rate movements.

Prices for soybean, canola and sunflower oils decreased in December, following several months of increases. Oilseed prices remain high compared with the first half of 2024.

The local oilseed market showed mixed price trends in December, with soybean prices having increased by 1.7% month-on-month and sunflower seed prices having declined by 4.6% month-on-month.

Looking ahead, the BFAP says, given the current low level of food inflation and the uncertainty around the summer crop following a difficult start to the season, prices of grain and oilseed products could remain elevated through the first quarter of this year.

This will support some increases in food inflation through early 2025, but from a low level. How long the higher prices last will very much depend on the ultimate size of South Africa’s summer crop, but if the widespread rain that fell in January is sustained through February and March, food inflation will stabilise again through the second quarter.  

Another factor that influences food inflation is the exchange rate, owing to its price influence on products that are frequently traded in the global market. With ample uncertainty globally since the inauguration of President Donald Trump in the US, as well as growing concerns about the stability of the Government of National Unity in South Africa in recent weeks, the rand has depreciated.

An acceleration in this trend would drive increased food inflation, but the converse is also true if the rand were to strengthen.