The Trundler Food Price Index
The end of another year is rapidly approaching! Since it’s Christmas Eve, we thought that it would be a good time to look at food price inflation in South Africa over the last year. We’ve been promising a ‘complete’ food price index for some time now, and the good news is that we’re ready to share the first version of this index, which uses price data from South Africa’s three major online retailers. Throughout 2020, there have been reports that the price of food has increased dramatically. Just how dramatically, you ask? Well, read on!
Our food price index is divided into eleven main groups, each consisting of a varying number of sub-categories. We aligned the selection of products and their respective weightings with those found in this reference document from Stats SA.
Here’s a look at the weighting of the main index components.
Interestingly, meat products carry the highest weighting, by a considerable margin. Then again, South Africa is a nation of meat lovers!
Let’s have a look at the inflation of each component for the 2021 financial year (thus far).
The price of dairy and egg products increased sharply during the month of May. Overall the price of these products increased by about 3% between March and December. The price of oils and fats increased by 4.5% over the same period. Meat and fish prices remained reasonably steady initially, but then surged during the latter stages of the year, increasing overall by about 5%.
The price of bread and grain products rose by about 6% between March and December! This is an alarming increase, particularly because many of these products are considered to be staple foods for a large portion of the population. It’s worth noting that there was a bumper maize harvest in South Africa this year (and indeed, the prices of products derived from maize have come down), yet even with the abundance of maize, inflation in this category remains high.
Vegetable prices increased by about 5% between August and December having remained largely stable prior to that period.
Interestingly, the overall price of fruit dropped noticeably during winter. This is partly due to the abundant citrus harvest this year, which brought the price of citrus fruit down.
Non-alcoholic drinks (sodas, fruit juices and energy drinks) and confectionery products increased by about 2.5% between March and December; with sharp increases occurring during the month of September. And it’s been an expensive year for tea and coffee drinkers - the price of warm beverages has increased by about 5% since March! Other products, which include various sauces, condiments and baby food, increased by about 3.5%.
With the exception of fruit products, inflation for every component in the index exceeded 2% for the period of March - December. Inflation for bread and grain products was the highest during this period, at about 6%. How is this reflected in the consolidated index?
Overall, the price of food in South Africa has increased by about 4.5% since the start of the March.
Between 2018 and 2020, food price inflation was about 3.75%, lower than overall consumer price inflation (CPI), which was about 4.5% over the same period. In 2020, CPI dropped to about 3%, the lowest level in 10 years, while our data show that food price inflation increased to 4.5%.
In this context, and also taking into account the increased unemployment rate in South Africa this year, it is concerning that food price inflation looks set to reach 5% by the end of the 2021 financial year. However, South Africa has traversed more volatile periods before - in 2017, food price inflation was close to 12%!