Inflation reacts to meat price hikes

THE RISE in the price of meat by 1.3% month-on-month in May, according to Statistics South Africa (StatsSA), has contributed to a rise in the South African food and non-alcoholic beverages inflation rate, which accelerated to 6.9% year-on-year (y/y) in May 2017. The figure was slightly up from 6.7% y/y recorded in April 2017.

Wandile Sihlobo, an agricultural economist and head of agribusiness research at Agricultural Business Chamber, said the uptick in food inflation was largely driven by meat, which was no surprise given the ongoing cattle herd restocking process resulting from the recent drought.

“As farmers continue to restock their herds, the slaughtering activity eased a bit, with that resulting in the increase in meat prices,” said Sihlobo.

Sihlobo added that with farmers building their cattle stock, the supply of red meat decreased.

“The most recent data shows that farmers slaughtered 193 373 head of cattle in April 2017, down 19% from the previous month and the corresponding period last year,” added Sihlobo.

Sanisha Packirisamy, an economist at Momentum, agreed with Sihlobo.

She said meat prices had been on the rise in the past 12 months and were now 12.3% higher than they were a year ago.