Shisa Nyama Index: food inflation may ease more

The average cost of a traditional South African braai rose less than the inflation rate for the first time since the gauge was tracked in November 2022, suggesting food prices may continue to ease.

Bloomberg’s Shisa Nyama Index, an early indicator of where food inflation may be heading, shows the average price rise of a backyard braai was 2.5% in February from a year earlier, versus 6.2% a month earlier.

That was less than the 5.3% year-on-year official headline inflation rate in January and a 7% increase in food costs. A sharp drop in onion and cooking oil prices of 28.5% and 13% respectively contributed to the fall in the index.

Lofty food prices have been a key driver of overall inflation in SA and have contributed to the central bank’s monetary policy committee remaining cautious of lowering interest rates that have been kept at a 2009 high of 8.25% since May.

Reserve Bank Governor Lesetja Kganyago last week reiterated that the benchmark rate will only be cut once inflation has been tamed and cited food prices, geopolitical risks and their impact on global supply chains and energy markets as some of the upside risks to the outlook.

Food prices may be adversely impacted by dryer weather in the coming months. Wandile Sihlobo, chief economist at the Agricultural Business Chamber of SA, said last month high temperatures and disappointing rainfall across the country in February pose a threat to agricultural output, reversing some of the benefits of above-average rains that fell in major producing regions in recent months.

The Shisa Nyama Index crunches data from the Pietermaritzburg Economic Justice and Dignity group of 14 key ingredients in braais consumed in South African townships.

To compile its survey, the PMBEJD tracks food prices on the shelves of 47 supermarkets and 32 butcheries that target the low-income market in the greater areas of Johannesburg, Durban, Cape Town, Pietermaritzburg and Springbok. –