South Africa: Food Inflation Surged to a 14-Year High in South Africa

South Africa’s food inflation rate surged to a 14-year high in March 2023, a departure from global easing of food prices. Food product prices that increased notably were vegetables, wheat and corn-based products, and plant-based oils. Although local grain and oilseed price movement is aligned with global commodity prices, and South African farmers are producing a fourth consecutive bumper corn crop and record soybean crop, the current electricity crisis has aggravated the food price situation. The electricity crisis in South Africa has led to persistently record-setting power outages, adding substantial costs across food value chains. Ultimately, this higher cost of production is passed down to the consumer rising food price inflation. Food inflation is the main contributor to South Africa’s escalating consumer price index inflation rate, increasing the probability of another interest rate hike.