Food inflation in South Africa could be heading for 15 percent over the next year, Andre Louw, a professor of agribusiness at the University of Pretoria, said yesterday. The sharp escalation is in line with global trends. The World Bank reported last week that global food inflation remained high at 36 percent year on year in March, compared with 37 percent in February.
Food inflation locally was 3.5 percent in February and, tomorrow, Statistics SA will provide an update for last month.
Louw said South Africa was exposed to global conditions because many crucial commodities, such as wheat, were imported. He cited in addition the “triple impact” of domestic cost push factors – rising electricity costs, higher fuel prices and looming toll road charges.
Electricity prices will rise nearly 26 percent in July.
The price of 95 octane unleaded petrol, which rose 54c this month to R9.96 a litre in Gauteng, is 16 percent higher than a year ago and likely to increase further as oil prices remain at elevated levels.
And vehicles transporting agricultural inputs and food will soon have to pay up to 66c a kilometre for using Gauteng highways. Mike Schussler, the chief economist at Economists.co.za, estimates that the planned toll road charges could push the price of milk from R7 to R10 a litre.
Food has a weighting of more than 14 percent in the consumer price index (CPI), electricity 1.87 percent and petrol nearly 4 percent. So increases in these components will have a significant effect on overall inflation, which was 3.7 percent in February. (read more)
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