Rising inflation sparks concern

The recent fuel price hike and the increase in inflation are bad news for farmers. Analysts reported that consumer inflation is accelerating to 5,5% year-on-year. The petrol price also increased by almost 40c a litre last week.
The inflation figure, said to be the highest in three and a half years, is expected to continue on an upward trend over the next few months. It is expected to peak at about 6% early in the second quarter.
Prof Johan Willemse, an agricultural economist at the University of the Free State, said increasing inflation can be detri­mental to the farmer. “There is a danger that interest rates could increase if inflation continues to rise,” Willemse said.
Economists said higher fuel and food prices are some of the factors to blame for the sharp increase in inflation. It is expected that food and petrol prices could place significant upward pressure on inflation in the next few months. 
Johan Pienaar, director of economics and trade at Agri SA, said because farmers are price takers, they will be the worst affected by these increases. “Farmers will pay more for fuel but can’t recoup this in producer prices,” Pienaar said.
He said expected price trends may have prompted some farmers to purchase diesel prior to the petrol price increase. “But it is impossible to buy enough fuel,” he said.
According to Agri SA calculations, farmers use one billion litres of fuel on an annual basis. – Wilma den Hartigh