Food prices maintain stability as South Africa sees steep inflation decline

Source: Supplied. Paul Makube, senior agricultural economist at FNB Commercial.

This positive development offers some optimism for consumers.

Despite challenging production conditions, food inflation fell from 4.1% year-on-year in September to 2.8% year-on-year in October, driven by declines across most categories.

This outweighed a slight increase of 0.1 percentage points in the sugar, sweets, and desserts category. Monthly food inflation remained flat at 0.4% month-on-month, despite notable increases of 2.7% month-on-month and 5.3% month-on-month in vegetable and fruit prices, respectively, which have relatively lower weightings in the food basket.

Bread and cereals inflation declines

A significant surprise came from the bread and cereals category, where inflation slowed to 4.6% year-on-year in October, down from 5.4% year-on-year in September. On a monthly basis, prices in this category declined by -0.5% month-on-month.

However, the outlook remains tight in the near term due to an El Niño-induced reduction in 2024 harvests. Consequently, South Africa’s white maize prices surged by 1.8% month-on-month and 38% year-on-year to an average of R5,670/tonne in October. The upward trend has continued into November, with spot prices recently reaching R6,300/tonne.

Global food inflation rebounds

In contrast, global food inflation has rebounded, reaching 5.6% year-on-year in October 2024, its highest level since October 2022, according to the United Nations Food and Agriculture Organisation (FAO). This follows 21 months of negative global food inflation, which ended in August 2024.

Vegetable inflation reversed its earlier gains, which were driven by mid-year inclement weather affecting key items like potatoes and tomatoes.

Year-on-year vegetable inflation dropped to 2.4% year-on-year in October (down 4.4 percentage points) but experienced a monthly increase of 2.7% month-on-month. Meanwhile, fruit inflation eased to 2.4% year-on-year, though monthly prices accelerated from 4.2% month-on-month in September to 5.3% month-on-month in October.

Looking ahead, near-term price pressures are likely to persist, with a slight uplift expected in the first half of 2025. However, favourable production conditions, increased summer crop plantings in South Africa, and robust global grain production forecasts may pose a downside risk to commodity prices in 2025.