Local and global food prices on the rise

Food prices across the world increased for the 10th consecutive month in March, according to the Food and Agriculture Organization of the United Nations (FAO). The FAO said in a statement that the increase was led by vegetable oils, meat and dairy subindices.

The FAO vegetable oil price index rose 8% from the previous month, reaching its highest level since June 2011.

“The persistent strength of the index was driven by higher values of palm, soya, [canola] and sunflower oils. International palm oil prices registered a 10th consecutive monthly increase, as lingering concerns over tight inventory levels in major exporting countries coincided with a gradual recovery in global import demand.”

The statement added that soya bean oil prices had also increased sharply, largely underpinned by prospects of firm demand, especially from the biodiesel sector.

Dairy prices rose for a 10th consecutive month, registering a 3,9% increase.

“In March, international butter prices rose, mainly underpinned by somewhat tight supplies in Europe due to a slow start to its milk production season, and increased internal demand in anticipation of a food service sector recovery,” the statement said.

The meat index climbed 2,3%. The FAO said poultry and pork quotations had increased, underpinned by the rapid pace of imports by Asian countries, mainly China.

Agbiz economist Wandile Sihlobo wrote in his weekly market report that South Africa was exposed to these shocks through palm oil, sunflower oil and soya bean oilcake imports.

“Hence, the global commodity price developments mirror what we’ve observed on the domestic market over the past couple of months, and will most likely appear in the consumer food price inflation category of oils and fats in the coming months.”

Recently, the Pietermaritzburg Economic Justice and Dignity Group (PEJDG) released its March Household Affordability Index. The group noted that South Africans were now paying nearly 5% more for a basic food basket than seven months ago.

The index, which tracked food price data from 44 supermarkets and 30 butcheries in Johannesburg, Durban, Cape Town, Pietermaritzburg and Springbok, showed that the standard monthly food basket currently cost R4 039,56. “Food price hikes are outpacing increases in baseline wages and social grants. We expect this upward trend [is] likely to continue,” said Mervyn Abrahams, PEJDG programme coordinator. – Jeandré van der Walt

‘FOOD PRICE HIKES ARE OUTPACING INCREASES IN WAGES AND SOCIAL GRANTS’