Braais won’t be cheaper for long

The price of a traditional South African braai rose at a slower pace for a second straight month, suggesting that food costs may cool further before the El Niño weather phenomenon scuppers the downward trend.

Bloomberg’s Shisa Nyama Index, an early indicator of where food inflation may be heading, shows the average price of a backyard braai rose 1.3% in March from a year earlier, compared with 2.5% in the prior month. Official food inflation slowed for a third straight month in February to 6%, and headline price growth quickened to 5.6%.

Onion, cooking oil, carrots, and cornmeal prices were the biggest contributors to the decline in the index.

Still, the drop in the gauge may be short-lived. South African Reserve Bank governor Lesetja Kganyago said at a monetary policy committee briefing last week that the country is “at a difficult juncture” regarding food prices. Hot and dry weather caused by El Niño may lead food inflation to pick up again, he said.

The dry spell that’s persisted across much of the country this year led the government’s Crop Estimates Committee last week to cut its outlook for the white corn harvest by 11% to 6.28 million tonnes, while the overall take that includes the yellow variety is projected at a five-year low of 13.3 million tonnes.

The revised forecasts may mean South Africa will need to import significant amounts of white corn, used to make a staple food, for the first time since 2017.

The central bank’s models show severe drought conditions could add 10 to 28 percentage points to food inflation.

“It looks like the risk to the crops could materialise more than what we thought of last year,” Kganyago said. –