High food price inflation leaves poor consumers in the lurch

maize harvest
The latest consumer price inflation data released by Statistics SA indicated that the price of special maize meal had increased nearly 30% in August, compared with the same month last year.
Photo: FW Archive

Annual food price inflation reached its highest level for the past 18 months in August, with the biggest year-on-year increase seen in the price of special maize meal.

This was especially bad news for the poorest consumers, whose basic staple food comprised maize meal or bread, according to Marlene Louw, consumer and food economics researcher at the Bureau for Food and Agricultural Policy (BFAP).

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“There isn’t really a cheaper alternative to which they can move,” she said.

The latest consumer price index (CPI) data released by Statistics South Africa (Stats SA) on Wednesday revealed that consumer inflation had increased from 4% in July to 4,3% in August.

Annual food inflation climbed to 3,8%, mainly driven by bread and cereal price increases of 8,6%.

“This is the highest annual inflation reading for bread and cereals since February 2017, when the rate was 12,8%,” Stats SA said in a statement.

Maize meal prices had “risen sharply”, with super maize nearly 18% more expensive in August this year than in the same month last year.

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“Special maize prices jumped 27,5% over the same period,” the statement said.

Louw said that BFAP had been anticipating the increases in cereal prices for some time, due largely to exchange rate fluctuations.

“The depreciation of the rand pushed up the parity prices, and we’re now also seeing the effect of the increase of producer prices in the retail sector.”

According to Louw, when there had been such high staple food price increases in the past, some low-income consumers had opted for rice as a cheaper alternative.

“This is not ideal from a nutritional viewpoint, though, because rice is not fortified like maize meal. This can have a longer-term impact.”

She said that the high oil price was also expected to lead to an increase in domestic petrol prices, which would filter through to food prices. More importantly, however, consumers would experience increased financial pressure.

“There will be less disposable income, so there won’t be a strong demand for ‘luxury’ meat, and as a result we don’t expect meat inflation to place much more upward pressure on food inflation in general.”

Louw said that high oil prices could also affect producer input costs for the new season, but this would most likely be reflected at retail level only in the first or second quarter of next year.