South Africa’s food inflation easing

Food prices in South Africa continue to increase at a startling rate, although the pace of acceleration is easing and possibly faster than is reflected in the official data so far.

The cost of a basket of goods in Bloomberg’s South African Shisa Nyama Index, designed to show the cost of a traditional backyard barbecue in townships and rural areas, rose 12% year-on-year in May, a sharp decline from 19% in February and a third consecutive monthly slowdown. A continuation of that trend will provide welcome relief for consumers who are also contending with high fuel prices, widespread unemployment, daily electricity outages and a stagnating economy.

Consumer prices rose 6.8% year-on-year in April, down from 7.1% the previous month, with food prices rising 14.3%, according to Statistics South Africa. Official data for May is scheduled to be released on June 21.

Crunching data from the Pietermaritzburg Economic Justice and Dignity group, Bloomberg’s index tracks the prices of some of the key ingredients in a shisa nyama — corn meal, onions, carrots, tomatoes, curry powder, salt, frozen chicken portions, beef and wors — a type of sausage made from a variety of ground meat offcuts.

To compile its survey, the PMBEJD’s data collectors track food prices on the shelves of 44 supermarkets and 30 butcheries that target the low-income market in the greater areas of Johannesburg, Durban, Cape Town, Pietermaritzburg, Springbok in the far northwest and the far northeastern town of Mtubatuba.

The cost of three items in the index — green peppers, cooking oil and samp — which is similar to grits — fell in May from the month before.

There is no guarantee the downward trajectory in food inflation will be maintained. The daily power outages that are being imposed on the country by state electricity utility Eskom Holdings SOC Ltd. are increasing the cost of food production at companies including Tiger Brands Ltd., RFG Holdings Ltd. and Astral Foods Ltd.-Fin24