Food inflation in South Africa hits 55-month low of 3.9% in July 2024

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Headline inflation continued decelerating after clocking 5.1% year-on-year in June to a 39-month low of 4.6% year-on-year in July 2024. Monthly, headline inflation edged 0.4% higher month-on-month with price pressures from electricity, which contributed 0.4ppts to the monthly outcome, and core inflation.

Food inflation continued to trend on the downside for the eighth consecutive month to reach a 55-month low of 3.9% in July 2024 as declines for most food subcategories more than offset gains in prices for the “bread and cereals” and meat products. Monthly food inflation fell to -0.1% month-on-month with price declines across most products, except fish.

Subcategory trends

The oils and fats categories extended their trend in negative territory for the fifteenth consecutive month at ‑0.1% year-on-year although monthly it edged 0.5% month-on-month in July 2024 from -0.8% month-on-month in June.

The fruit and vegetable categories continued to surprise on the downside in July as recent weather-related damages to crops are yet to filter through. Monthly fruit inflation decreased for the sixth consecutive month to -1.6% month-on-month and -1.7% m/m respectively in July. Annual vegetable inflation slowed to 3.4% year-to-year while fruit decelerated by 2.1ppts from last month to 2% year-on-year.

Nonetheless, the impact of black frost that decimated crops in Limpopo and strong winds and flooding conditions in parts of the Eastern Cape and Western Cape provinces respectively remains a concern as supplies might tighten in the medium term.

Bread and cereals impact

Annual bread and cereals inflation edged up by 0.2 ppt from June to 5.6% year-on-year in July 2024 which is a gradual pass-through from the drought-induced price increases in the grain complex over the past few months. Tight regional supplies of maize particularly the white category pose near-term upside risk for prices as exports surged on high demand.

South Africa is however still well supplied due to the good carryover stock from the previous season, estimated at 1.36 million tonnes by April 30, 2025.

This trend is likely to be sustained in the short term. Nonetheless, the combination of the improved weather outlook with the La Nina weather pattern starting to take hold will limit further upside for grain prices in the season ahead and consequently the “bread and cereals” inflation outcomes.

Further downside risks include subdued global inflation, a stable to stronger rand and lower international crude oil prices.