SOUTH AFRICA—The South African Reserve Bank (SARB) has revealed that the country’s food inflation has declined for the seventh consecutive month to reach a four-year low of 4.1% on a year-on-year (YoY) basis in June 2024 compared to June 2023.
Food subcategories aside from bread, cereals, and meat continued to decline and were led by oils and fats. Annual bread and cereal inflation increased by 1.2% from May to 5.2% YoY in June 2024. According to SARB, this slight price increase reflects the drought-induced price increases in the grain market experienced in the past few months.
SARB reiterated the trend is likely to be sustained in the short term, albeit aided by improved weather conditions caused by the La Nina weather pattern.
Meat prices also increased by 0.8% YoY basis in June compared to 0.7% in May after rebounding for the first time in positive territory since February at 0.1% month-on-month (MoM).
YoY oil and fat inflation declined by 1.2% for the fourteenth consecutive month, which represents a 0.8% decline MoM. Solid production and rebounding demand in the international market have contributed to the curtailed increase of vegetable oil prices despite supply challenges experienced in the Black Sea region.
Monthly fruit inflation recorded a decline for the fifth consecutive month by 2.2%, which is a 1.9% decline to 4.1% YoY basis in June. According to SARB, this decline is due to enhanced supplies. Vegetable inflation decreased by 2.9% MoM and 2.9% YoY to 4.7%.
However, experts warn black frost currently decimating crops in the Limpopo region and the torrential rains experienced may constrain supplies, which is most likely to cause an increase in vegetable prices in the next few months.
Overall, SARB maintains inflation appears benign in South Africa, with energy deflation positively counteracting the pressures of food and utility prices. SARB also reiterated the potential causes for deflation include subdued global inflation, a stable and strengthening rand and favorable international crude oil prices.
The current geopolitical tensions pose the most significant risk for upward inflation. Conflicts in the Red and Black Seas have increased the logistical and freight costs, translated to consumers.
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