Western Cape Food Inflation Brief: February 2023

by Ayabonga Sibulali (left) and Asanda Molefe

FFood price changes have an influence on the consumer spending power and the quantity of items that can be purchased at household level. Figure 1 illustrates average prices of all food items consumed in South Africa (RSA) and the Western Cape (WC) since February 2015 to February 2023 on a year-on-year (y/y) basis. In March 2021, the RSA and WC food prices started to rise as the country and the world gradually opened up after hard-lockdown government restrictions. The latter made this a priority concern in the country due to its anticipated impact associated with COVID-19 (USDA, 2021). The country’s food prices (y/y) have been rising for almost a year (BFAP, 2023), recording 13.9% in February 2023, two times higher than 6.7% in February 2022, and the February average price since 2010. WC reported a food price increase of 12.4% (y/y) in February 2023, 1.5% lower than the national food price increase (13.9%).

The food price increase in February 2023 can be associated, amongst other things, with the international wheat prices rising marginally by 0.3% in February (FAO, 2023). The food price increase was also a reflection of the continued uncertainties from the Black Sea Grain Initiative. Other contributing factors included the dry conditions in key production areas of hard red winter wheat in the United States of America (USA), as well as the rise in the world grains prices such as maize. The grain prices were underpinned by limited production in the USA and the European Union, dry conditions for maize crop plantings in Argentina, and uncertainty caused by Ukraine’s exports (FAO, 2022). The country’s unstable and weaker trading exchange rate (ZAR/US$) recently (BFAP, 2023) impacted domestic food prices. The increasing global commodity prices, accompanied by higher farm input costs including feed, and local fuel prices, were also the drivers of food inflation from 2019 to February 2023.

Comparing February to January 2023 month on month (m/m) WC food price changes, vegetables (1.4%), bread and cereals (1.0%), and fish (1.0%) were among the products driving the food price increases in the province (see Figure 2 on next page). The vegetable prices have increased driven by weather-related factors in key production regions and strong local consumer demand.

Additionally, persistent global food-supply disruptions and unending Eskom blackouts’ impact on irrigated agriculture drive food price increases.

The absolute prices for onions, potatoes and tomatoes increased significantly due to supply shortfalls caused by erratic weather conditions (BFAP, 2023). This occurred in the presence of the persistent consumer spending power constraints.

Moreover, low investment in farm production and productivity, seasonality, harvesting to off-season activities, exchange rate dynamics and collapsing Port of Cape Town infrastructure, all have an impact on the food prices.

Furthermore, the meat prices in the WC declined, reaching -0.4 % (m/m) – an opposite picture of the national prices (0.2%). This could be a reflection of global abundant poultry supplies, and stable world bovine meat prices combined with improved import purchases, especially from North Asia (FAO, 2023).

In conclusion, in February 2023 the headline inflation for RSA was at 7.0% (y/y) and food 13.9% (y/y). In the WC headline inflation was at 6.95% (y/y) and food 12.4% (y/y). Products with significant increases in the WC were vegetables (1.4%), milk, eggs and cheese (1.1%), bread and cereal (1.0%), and fish (1.0%) (m/m). AP

References

BFAP. (2022). Food Inflation Brief: March 2022. Pretoria, South Africa: Bureau For Food and Agricultural Policy (BFAP).

BFAP. (2023). Food Inflation Brief. Pretoria, South Africa: BFAP.

FAO. (2022). FAO Food Price Index virtually unchanged in October. Food and Agriculture Organisation.

FAO. (2023, March 22). Food and Agricultural Organisation of the United Nations. Retrieved from fao. org: www.fao.org/worldfoodsituation/foodpricesindex/en/

StatsSA. (2023). Time Series data: CPI Publications. Pretoria, South Africa: Statistics South Africa.

USDA. (2021). Rising Food Price Inflation in South Africa causes concern for Consumers. Pretoria, South Africa: United States Department of Agriculture.

For more information, contact Ayabonga Sibulali: or Asanda Molefe: