South African food and non-alcoholic beverage (NAB) inflation (hereafter to be referred to simply as food inflation, for short) in January remained, for the eleventh consecutive month, below the upper (6%) target limit for the country’s Consumer Price Index (CPI) headline year-on-year inflation rate, the Bureau for Food and Agricultural Policy (BFAP) think tank has pointed out, in its latest Food Inflation Brief report. January was also the third consecutive month in which year-on-year food inflation (at 2.3%) was below the CPI headline inflation figure (3.2%). However, month-on-month food inflation in January (0.4%) was slightly higher than CPI headline inflation (0.3%). Nevertheless, January’s month-on-month food inflation was 0.2 percentage points (ppt) below the figure for December. Since November 2023, food inflation has fallen by 6.7 ppt.

Regarding wider economic factors that affect agriculture, the BFAP noted that the rand appreciated against the dollar by 0.4%, year-on-year, from R18.79:$1.00 in January 2024 to R18.72:$1.00 in January this year. However, month-on-month, the rand depreciated against the dollar by 3%, from R18.18:$1.00 in December to R18.72:$1.00 in January. South Africa’s CPI for “electricity and other fuels” increased by 11%, year-on-year, and by 0.4%, month-on-month. But the CPI figure for “fuel” was -4.5%, year-on-year, although it was up 0.9%, month-on-month.

The food categories which contributed most to year-on-year food inflation in January were NAB (9%), sugar and sugar-rich foods (5.7%), fish (4.2%), bread and cereals (3.8%), oils and fats (2.8%), fruit (2.1%), dairy and eggs (1.7%), and vegetables (0.7%). Meat recorded year-on-year deflation of -0.6%. In month-on-month terms, the food categories with the highest inflation were vegetables (0.9%), meat (0.8%), oils and fats (0.7%), bread and cereals (0.6%), NAB (also 0.6%), and fish (0.2%). Month-on-month deflation was recorded by sugar and sugar-rich foods (-0.1%), dairy and eggs (-0.5%), and fruit (-1.3%).

In December (not January), commonly bought food items that recorded year-on-year inflation equal to or higher than 20% were (in the order and categorisation by the BFAP) fruit juice concentrates; and, avocados. In the range from 10% to just under 20% were mutton/lamb offal; dried beans; cabbage, bananas, oranges; rooibos tea, Ceylon tea, and instant coffee. In the range from 5% to just under 10% were rice, baked goods, maize meal; beef offal, polony, ham; frozen hake, fish fingers; powdered milk, whiteners; mageu (a traditional NAB); peanut butter; tomatoes, cucumber, carrots; and, brown sugar. Those food items which saw year-on-year deflation, again in December, were (again as ordered and categorised by the BFAP) instant noodles, wheat flour; beef (mince, fillet, stew), pork (chops, ribs, fillet), mutton/lamb (rib chops, loin chops, leg, neck, stew), chicken (whole fresh, fresh portions, frozen but not individually quick frozen portions, giblets); prepared custard, eggs; sunflower and canola oil; pears, lettuce, pumpkin, onions, potatoes, and sweet potatoes.

The price of the BFAP’s Thrifty Healthy Food Basket (THFB) increased by 3.6%, or by R133, year-on-year, in January. In month-on-month terms, it rose by 1%, or R37. The THFB is composed of 26 nutritionally-balanced food items from all the food groups, and is designed to feed a reference family of two adults, and one older and one younger child, for a month. In terms of affordability, in January buying the THFB would have cost that family 31.2% of its income. This was higher than in December, when the figure would have been 30.9%.

“Food inflation pressure is expected to increase in the coming months, driven by factors such as global uncertainty associated with the new US government, and possible effects on the rand exchange rate,” observed the BFAP. “The exchange rate is a core factor to keep an eye on, affecting not only prices of products that are frequently traded in the global market, but also several cost drivers through the value chain.”