South Africa: Food Price Inflation Causes Concern For Consumers

The continued sharp increases in food price inflation from 3.4 percent in 2019, to 4.6 percent in 2020 and to an estimated 5.4 percent in 2021, remains a concern in South Africa. This is due to its inflationary role in the general Consumer Price Inflation (CPI), and its potential to exacerbate the ongoing economic and social impact of COVID-19, especially with regard to food security in poor households. Some of the drivers of food price inflation are state administered electricity tariff increases (+15 percent); increases in minimum wages (+16 percent); allegations of excessive price increases by some retailers; and changing consumer shopping trends. South Africa has also been impacted by higher crude oil prices (+30 percent in 2021) and international commodity prices such as sunflower oil, grains, and meat. While Post expects that U.S agricultural exports may rebound in 2021, the increase in food inflation may compound the challenges being faced by U.S. agricultural exports.