South Africa's Food Inflation Hits Decade-Low Amid Rising Fuel Costs

South Africa's food inflation has hit its lowest level in over a decade, but rising fuel costs and global tensions threaten to undo the relief for households. According to Statistics South Africa, food and non-alcoholic beverage inflation slowed to 0.9% last month, driven by lower prices for meat and cereal products.

The Agricultural Business Chamber of South Africa's chief economist, Wandile Sihlobo, credits strong agricultural production for the decline in food prices. He points out that South Africa recorded its biggest maize harvest on record, with overall grain production estimated at 21.6-million tonnes and maize production at about 17.4-million tonnes.

Sihlobo notes that lower grain prices are providing some relief, while increased local meat supplies have also contributed to declining prices. However, he warns that rising fuel costs could push food prices higher, particularly as most food in South Africa is transported by road.

While Sihlobo believes things will remain 'at least slightly affordable' for households until the first quarter of next year, he identifies higher energy costs and the possibility of an El Niño bringing drought conditions to Southern Africa as major risks. He predicts that food price increases will remain moderate in the near term but could increase from the second quarter of next year.