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Daily Maverick
13 hours ago
- Business
- Daily Maverick
Unaffordable – beef prices contribute to food inflation uptick while headline inflation remains low
The annual rate for food and non-alcoholic beverages increased to 4.8% from 4.0% in April, the highest point since March 2024, when the rate was 5.1%. Food & non-alcoholic beverages is the only category that contributed to the monthly increase in the Consumer Price Index. The monthly change in food and non-alcoholic beverages was 1.1%, following a 1.3% rise in April. Maverick Citizen has been tracking the prices of 14 basic food items that a consumer can buy with R370, the amount of the Social Relief of Distress (SRD) grant. The food basket hovers above R400, making it unaffordable for those who receive the grant as their only source of income. Our basket decreased by R8 and sits just under R400 – still higher than the SRD's R370, keeping in mind the basket does not include transport to withdraw the money, and electricity to cook the food. The food and non-alcoholic beverages category is at 4.8%, contributing 0.9 of a percentage point to headline inflation, according to the Consumer Price Index (CPI) released on Wednesday, 18 June. For all urban areas, annual consumer price inflation was at 2.8% in May 2025, unchanged from 2.8% the previous month. The CPI increased by 0.2% month on month in May 2025. The main contributors to the 2.8% annual inflation rate were: Housing and utilities (4.5%, contributing 1.0 percentage point) and alcoholic beverages and tobacco (4.3%, contributing 0.2 of a percentage point). In May 2025, the annual inflation rate for goods was 1.8%, up from 1.7% in April 2025. Services was 3.6%, down from 3.8% in April 2025. In the latest Household Affordability Index, the month-on-month average cost of the foods prioritised and bought first in the household food basket increased by R31.77 (1.1%) from R2,923.58 in April 2025 to R2,955.34 in May 2025. Year on year, the average cost of the foods prioritised and bought first in the household food basket increased by R89.53 (3.1%) from R2,865.81 in May 2024 to R2,955.34 in May 2025. 'The data show that the core foods contribute 54% of the total cost of the Household Food Basket. At an average cost of R2,955.34 in May 2025, these foods are relatively very expensive in relation to the total money available in the household purse to secure food. These foods must be bought regardless of price escalations. The high cost of core staple foods results in a lot of proper, nutritious food being removed from the family plates. The consequences of high costs on the core foods have a negative impact on overall household health and wellbeing, and child development,' the Index says. Beef continues to push meat inflation higher Stats SA says that meat, specifically beef, is a key factor behind the rise in food inflation. The annual rate for meat jumped from 3.0% in April to 4.4% in May. In April, monthly increases for beef products ranged from 6.2% to 11.9%. In May, notable monthly increases were recorded for beef steak (up 4.5%), stewing beef (up 2.5%) and beef mince (up 1.7%). A widespread outbreak of foot-and-mouth disease, combined with higher feed prices, contributed to the rise in beef inflation. The impact is trickling down to the pockets of consumers who will be hit by price increases. In June 2024, the average price for Class A beef was R55.45 per kg. In May 2025, the average price for Class A beef was R68.01 per kg, which is 6.3% higher than in April 2025. Year on year average prices for Class A increased by 23.2% in May 2025 compared with May 2024, according to the latest Beef Monthly Report. Workers Needless to say, people who receive grants are unable to purchase enough food in general, but nutritious food specifically. This also affects workers who have to prioritise getting to work, so transport, electricity and debt go first before food is bought. The Household Affordability Index said the national minimum wage was a 'poverty wage — it hurts workers, it reduces productivity in the workplace, and slows down economic growth.' This is based on their three scenarios using real-life examples of how much a taxi fare is, the average salary and other factors in specific towns, such as in Pietermaritzburg. The maximum wage of R4,836.72 in May 2025, when disbursed in a family of four persons, is R1,209.18. 'This is below the upper-bound poverty line of R1,634 per capita per month. Set at such a low level, the [national minimum wage] works to institutionalise the low-baseline wage regime and lock millions of workers into poverty. Small annual increments off such a low wage base (in rand-value), and which do not reflect inflation levels as experienced by workers, nor the actual cost of worker expenses (including not projecting inflation forward for workers in the entire 2025/26 term), means that workers on the [national minimum wage] are getting poorer and poorer each year,' the index says. The minimum shortfall on food for a family is 45% in May 2025. After paying for transport and electricity, workers are left with R2,113.75. If all this money went to food, then for a family of four, it would provide R528.44 per person per month. The Food Poverty Line is R796 per person per month. Rising pressure According to the Food Inflation Brief, inflationary pressures could rise in the coming months because of uncertainty around the policy direction of the US government, and its potential impact on the exchange rate remains a key factor influencing price movements. 'Emerging market currencies, such as the rand, typically come under pressure during periods of global uncertainty. On a positive note, the rand has recently strengthened against the US dollar ahead of the Treasury's third revision of the local budget and following the crucial bilateral meeting with the US. Although the Treasury did not increase the VAT rate, it did raise the fuel levy; a decision whose impact on consumers will become more pronounced if global oil prices rise and the rand weakens,' the brief says. 'The anticipated rebound in the new summer crop harvest could help ease staple food prices for consumers and also offer some relief to livestock producers through lower feed costs, enabling increased supply. Cost buildup in the value chain due to higher fuel costs may limit the extent of this relief. 'In the livestock and meat sector, animal disease outbreaks remain a critical risk to monitor due to their potential impact on supply and pricing,' the brief says. DM
Daily Maverick
16-05-2025
- Business
- Daily Maverick
Rising food price challenge for SRD grant recipients amid global economic uncertainty, local droughts
The benefit of a steady food inflation is showing in our SRD basket. Most items have stayed in the same price range for the first half of the year with a noticeable increase in maize meal, for which the price jumped by R10, and beef stock. Experts say this lull may be over as multiple factors threaten food price stability. Maverick Citizen has been tracking the prices of 14 basic food items that a consumer can buy with R370, the amount of the Social Relief of Distress (SRD) grant. The food basket hovers above R400, making it unaffordable for those who receive the grant as their only source of income. Food inflation pressure is expected to rise modestly in the coming months, driven by concerns associated with the policy direction of the new US government and potential impacts on the exchange rate, according to a Food Inflation Brief released in May. The Bureau for Food and Agricultural Policy Brief provides an overview of food inflation dynamics, its associated causes, and the cost of basic healthy eating based on March 2025 food prices. The latest Stats SA Consumer Price Index shows that the annual rate for food and non-alcoholic beverages dropped to 2,7% in March from 2,8% in February. Vegetables, fruits and nuts, cereal products, meat and fish registered higher annual rates. Lower rates were recorded for oils and fats; hot beverages; milk, other dairy products and eggs; cold beverages; and sugar, confectionery and desserts. In the Household Affordability Basket the average cost of the foods prioritised and bought first increased by R0,05 (0,0%) from R2,923.52 in March 2025 to R2,923.58 in April 2025. Year-on-year: The average cost of the foods prioritised and bought first in the household food basket increased by R53,28 (1,9%) from R2,870.29 in April 2024 to R2,923.58 in April 2025. Global uncertainty The Bureau for Food and Agricultural Policy Brief stated that prices may edge higher because emerging market currencies such as the rand tend to come under pressure when global uncertainty increases. 'In South Africa this was further exacerbated by the uncertainty related to the stability of the Government of National Unity amid Budget negotiations. With the National Treasury's decision to rescind the proposed increase in Value Added Tax (VAT), consumers are no longer faced with the possibility of additional pressure for items outside the zero-rated basket,' the brief reads. 'Moreover, the anticipated rebound of the new summer crop harvest will provide relief to livestock producers through lower feed costs and ease the cost of core staples for consumers. On the meat and dairy side, animal disease outbreaks remain a critical factor to monitor, given their potential impact on supply and prices,' the report reads. A current prominent disease outbreak is food-and-mouth disease that has resulted in China halting the trade of beef and meats from cloven-hoofed animals. The impact may see prices fluctuate as the agricultural community tackles this flare-up. The R10 jump in maize meal reflects the ongoing price volatility in maize due to drought-affected harvests. 'South Africa's maize prices have exhibited significant volatility in recent months, following a drawdown on stocks after the drought-affected 2024 harvest of only 12.8 million tons. Given that maize is South Africa's staple crop that plays a crucial role in food security for low-income households, it is essential to provide additional context on recent market dynamics,' the brief explains. Forecast On 30 April 2025, the South Africa Crop Estimates Committee released its third summer crop production forecast, projecting a maize harvest of 14.7 million tons — a 14% increase compared to the drier 2024 production season. According to the latest report from the National Agricultural Marketing Council's Supply and Demand Estimates Committee, total domestic demand for white and yellow maize is estimated to be just under 12 million tons. The Food Inflation Brief says this indicates that South Africa will sufficiently meet its local maize consumption requirements, 'both as a staple food crop and a key ingredient in animal feed. Additionally, South Africa is expected to fulfill its commitments to traditional regional export markets, including Mozambique, Swaziland, Namibia, and others.' Significant concern was raised in the media recently as maize prices exceeded R6,000 per ton. The report states that his peak happened only on 22 April, when the prices of white and yellow maize surged by more than R800 per ton within a single day. 'This sharp increase was driven by the closure of technical trading positions on the final trading day for the futures contract, rather than any fundamental changes in supply and demand conditions. Consequently, there is no expectation of abrupt maize meal price hikes that could negatively impact food security in the near future.' DM
