South Africa's Favorable Agricultural Season Keeps Food Prices Low

The agricultural season in South Africa has been favorable, leading to lower consumer food price inflation. Statistics South Africa reported that food prices rose by only 0.7% in August 2026, down from 0.6% in July. This is the lowest level since 2010.

Grain-related products, fruits, and vegetables are currently in deflation, contributing to the low inflation rate. Meat prices have also moderated, but red meat prices have been affected by fears of foot-and-mouth disease.

The only products that saw an increase in August were fish and seafood, milk, dairy products, and eggs, but these account for a small share of food prices. The ample harvest is expected to keep grain prices under pressure, with production forecast at 21.6 million tonnes, up 5% from the previous season.

However, challenges remain, including inefficiencies at the Port of Cape Town and foot-and-mouth disease in the livestock industry. The wheat industry also faces higher input costs and drier weather conditions.

The war between the US and Iran is a major near-term risk, as it may lead to higher fuel costs, which account for over 80% of food distribution costs. In the medium term, the forecast El Niño drought poses a threat to 2027's crop production.