Statistics South Africa this week released the latest inflation figures for August 2021, showing that food price inflation remains one of the biggest contributors to the CPI in the country.
The food and non-alcoholic beverages group was the second largest contributor to the annual inflation rate in August, registering an increase of 6.9%. This is the highest level of food inflation since June 2017, when it was also 6.9%.
However, there are signs that food inflation may have started to slow, Stats SA said.
The monthly increase in August 2021 was 0.2% – identical to the readings in July and June. In comparison, the average monthly gain over the past 12 months was 0.6%. Of the 11 food categories, four posted monthly declines in August; one showed no change and six recorded increases.
The prices of bread and cereal products fell 0.5% from July 2021. The prices of corn flour fell by 1.2% and white bread by 1.1%. The annual increase for this category was 3.5%.
Meat inflation continues to accelerate, reaching 10.7% in August. This is the highest level since February 2018, when the rate was 11.4%. IQF chicken products (individually frozen) were 1.6% more expensive in August than in July, while ground beef was 0.4% cheaper.
Annual inflation for oils and fats was 21.3% in August, down slightly from 22.4% in July. Cooking oil prices were down 0.4% and margarine prices were down 0.8% month over month.
Rising food prices
Research by the Pietermaritzburg Equity, Justice and Dignity (PMBEJD) group found that food price inflation for the poorest households in South Africa rose 10% in the past year, well above the overall CPI of about 5%.
BusinessTech has been tracking a more “middle-class” food basket since 2015, including some food items that would be more commonly found in a more middle-income shopping basket.
This includes apples, vegetables, milk, flour, tea, sugar, rice, and cola. While the basket itself is not a comprehensive overview of middle class shopping items, it does track price fluctuations in the segment and across various retail brands.
Year over year, comparing brands and comparable food products, South African retailers have managed to contain price increases for the most part, with some things even decreasing between 2020 and 2021.
Since 2015, that basket of items has grown by almost 50% over the years, with the same like-for-like items rising from an average total of Rand 226.33 in 2015 to Rand 335.01 in 2021 (+ 48% ).
Over five years (2017-2021), the increase is more moderate at 22%.
Prices reflect the average cost of private labels across four retail chains in South Africa, entered in store and online in the year shown.
The price inflation in the BusinessTech basket closely follows the food price inflation recorded by Statistics South Africa between 2017 and 2021. It is nevertheless lower than the growth observed in the average wage and the take-home wage during the same period. .
Between 2017 and 2021, the average salary rose from Rand 19,170 to Rand 23,122 according to Stats SA’s quarterly employment survey, an increase of 21%. Meanwhile, BankservAfrica’s net salary index shows an increase in nominal net salary of just 14%, from R12,808 in 2017 to R14,620 in 2021.
While the average formal wage in the country has barely kept up with the rising cost of food over the past five years, the reality – after-tax disposable income – lags behind.
According to Stats SA, using the base from December 2016, headline inflation increased by 22.3% in the last five years. Food inflation stands at 23.6% compared to the end of 2016.
Among the food categories examined by Stats SA, meat products experienced the largest price increase since 2016.
- Me at: + 35.3%
- Oils and fats: 31.8%
- Fish: + 28.0%
- Cold drinks : + 25.2%
- Unprocessed Foods: + 24.0%
- Sugar, sweets and desserts: + 23.9%
- Processed foods: + 23.0%
- Milk, cheese and eggs: + 21.7%
- Hot drinks: + 19.8%
- Vegetables: + 19.2%
- Other food: + 16.9%
- Breads and cereals: + 9.7%
- Fruit: + 1.1%
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