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SA’s food price inflation remains subdued for now

───   CHRISTAL-LIZE MULLER 09:18 Tue, 19 Nov 2019

SA’s food price inflation remains subdued for now | News Article

The severe drought, which is crippling farming communities in a large part of South Africa, can have possible implications on the country's food price inflation, but only later on.


Wandile Sihlobo, Chief Economist at the Agricultural Business Chamber of South Africa, Agbiz,  speaks in this insert about these possible implications. 

This comes at a time when South Africa’s food price inflation has generally been subdued, having averaged 2.9% on a year-on-year basis in the first nine months of this year. Sihlobo says this is because of relatively lower meat, milk, eggs, and cheese prices, amongst other products, which managed to overshadow the price increases of grain-related products over this period.  

Here is Sihlobo:


See PODCAST below


He says while this year’s drought conditions are a concern, current indications such as soil moisture, near-term weather forecasts, and meat market dynamics suggest that it might not be as intense as the 2015/16 drought where South Africa’s food price inflation was at double-digits for some time. The near-term weather forecasts show prospects of 16 and 60mm of rainfall this week over the summer rainfall areas of South Africa. This is with the exception of the Eastern Cape which is expected to remain dry and warm throughout the week.

He is of the opinion that meat production, which accounts for more than a third of South Africa’s food price inflation basket, could remain subdued in the near term. The possible marginal upticks will mainly be because of base effects like another case of foot-and-mouth disease in the Molemole district of Limpopo. The consequence of this is likely to be a temporary ban on South Africa’s meat exports. Mozambique, Zimbabwe, and eSwatini are some of the countries have already placed a ban on South African livestock and products’ imports.

Initial estimates showed South Africa’s food price inflation for 2020 at 4.9% y/y and this estimate will be revisited at the end of January 2020 when there is concrete evidence about the actual summer crop area planted and the weather outlook for the rest of the 2019/20 production season.)


That was Wandile Sihlobo, Chief Economist at the Agricultural Business Chamber of South Africa, Agbiz.


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