Good news for braai lovers this Christmas – with a warning for 2024

Despite food price inflation remaining well outside the Reserve Bank’s headline inflation target range of 3%-6%, meat prices in South Africa are continuing their downward trend.

This is according to the latest food inflation brief from the Bureau for Food and Agricultural Policy (BFAP) for November 2023.

Continuing the increasing trend from August 2023, Stats SA showed last week that year-on-year inflation on food and NAB increased further from 8.7% in October 2023 to 9.0% in November 2023 – in line with levels last observed June / July 2022.

However, despite continued food inflation, CPI Headline inflation showed some recovery from 5.9% in October 2023 to 5.5% in November 2023.

Year-on-year the higher food inflation is primarily being driven by fruit, vegetables and sugar-rich food items, with all other food categories coming down.

Specifically, aside from oils and fats, which saw an exceptional spike in 2022, meat prices now have the lowest inflation in the food basket at 3.5%

The BFAP has recorded deflation for all kinds of beef and mutton prices, including fillet, sirloin, T-bones, chops and ribs.

The recent Bloomberg braai index showed a similar easing of prices heading into the festive season.

Warning

However, with the good news for meat prices comes a warning.

According to the BFAP, looking ahead, the group is still fairly confident that food price inflation could stabilise, and there could even be some declining trends in near future if vegetable prices start declining due to higher production levels in response to high producer process.

However, over the long run, South Africa’s infrastructure challenges and costs within the value chain (electricity, fuel, wages) are reasons for concern.

“Even if food inflation rates decline, rising costs within the chain imply that food will become more expensive in absolute terms, which is a major concern for low-income households,” it said.

The group added that with the looming impact of El Nino and significantly lower rainfall in the western production regions, summer crop prices, mainly maize, could also be affected.

“Most of the eastern and central production regions have received sufficient rain and intended plantings have been completed. However, in the west, some of the regions have received sufficient rain to plant, but there are still some areas that have not planted yet,” it warned.

“(December) will be decisive to complete the maize plantings. The impact of potentially higher maize prices will only feature in maize meal inflation rates three to four months later, i.e. from March 2024 onwards.”

Read: Good news for Christmas braais in South Africa