ECONOMIC and political conditions in the country and globally could trigger an increase in food prices, forcing South African consumers to pay more for basic commodities.
The warning was made by Casey Sprake, an economist for an international wealth management company, Anchor Capital, which detailed the challenges that could await South Africans.
Anchor Capital outlined challenges in the food industry globally and locally in a report titled “2024 Food Price Trends: Global Shifts, Local Impacts, and What’s Ahead in 2025”.
The company warned that a combination of economic and political factors, including the pressure brought by US President Donald Trump’s attacks on the country, could weaken the rand, causing a spike in food prices.
Trump has targeted South Africa with an executive order cutting funding.
The report stated that the effects of global market trends, exchange rates, and supply-demand dynamics have played a significant role in shaping commodity prices in 2024.
It said the El Niño-induced weather events led to a drop in maize production, mainly white maize, which saw price increases due to lower local supply and higher demand from southern Africa. Meat prices, the report said, were influenced by factors such as animal diseases, exchange rates, and seasonal supply fluctuations.
Poultry prices eased after an avian influenza recovery, while pig meat prices saw a marginal rise. Dairy prices eased as a stable electricity supply enabled increased milk production, while seasonal factors and extreme weather conditions influenced fruit and vegetable prices.
“Given the current low levels of food inflation and the uncertainty surrounding South Africa’s summer crop due to a challenging start to the season, prices for grain and oilseed products are expected to remain high throughout the first quarter of 2025,” the report stated.
“This price elevation will probably contribute to some increase in food inflation, although the rise will be relatively modest due to the low inflation starting point. However, the duration of these elevated prices will be primarily influenced by the size and performance of the summer crop.
“The exchange rate also plays a critical role in shaping food inflation, affecting the cost of products heavily traded in the global market. Since the inauguration of Trump, there has been increased global uncertainty, which, combined with Trump’s recent attacks on South African government policies and concerns about the stability of South Africa’s Government of National Unity (GNU), has put pressure on the rand-dollar exchange rate.”
Economist Dawie Roodt said food inflation is quite low at present, with some instances of declining food prices. If Trump imposes sanctions, however, it could lead to a weaker rand, higher inflation, and higher food prices.
Wandile Sihlobo, chief economist of the Agricultural Business Chamber of SA, said that despite challenges, “South Africa is in a better place regarding food security compared with other countries.
“This does not mean there should be complacency.”
The Unisa Bureau of Market Research (BRM) said: “If inflation and economic pressures persist, food affordability will remain a challenge, especially for low-income households. While the decline in food price inflation observed in late 2024 provided some relief, the increases in prices for some food items and prevailing uncertain economic conditions suggest that consumers may continue to face challenges related to food affordability in 2025.”