South Africa is in the grip of a worrying trend of high food prices which in February 2023, nearly surpassed the 2009 record. A loaf of bread now costs up to 20 Rand ($1.09), a cost that seems like a nightmare to the common consumer who recently used to buy it for only 5 Rand ($0.27). The situation was first blamed on the Covid-19 pandemic but the hope that the end of the pandemic would ease prices is itself waning with sustained inflation.  

Inflation on a steady climb since January

In January, high food prices had pushed inflation in South Africa to 6.9 percent. A month later, the inflation climbed to 7.0 and by March, 2023, the point-by-point rate of inflation had clocked at 7. 1 percent.  Consumables and beverage drinks such as tea and coffee have seen some of their highest prices since 2009, when the currency devaluation rate had stood at 14.3 percent. 

By the first quarter of 2022, the devaluation had neared that of 2009 at a flat 14 percent.  This happened in the wake of the lifting of lockdown laws that had been in place for two years against the corona virus pandemic. 

For export and wholesale prices for various food products in South Africa, please check the South Africa food prices insights. 

What really is causing the hike in food prices

It is notable that it is not just South Africa that is experiencing high inflation. So, this is a global issue that partially stems from the food distribution reorganization that had been disrupted during the Covid-19 stint. Secondly, the ongoing war in Eastern Europe between former Soviet neighbors, Russia and Ukraine, has had a telltale effect on the rise of prices in consumer products.

Regarding the Covid-19 issue, it is rather equivocal to consider it a contributing factor, especially from the point of view that  inflation rates during the pandemic years of 2020 through early 2022 were lower than now.  

On the second score of global inflation, the same reasoning can apply because the UN Food and Agricultural Organization (FAO), via its  Food Price Index,  has recorded lower food costs around the world, by 0.8 percent, compared to the same costs at the end of 2022. So, what is really the primary reason for the contrary South African trend?

Enter the Rand devaluation: the inflationary effect on the South African currency is perhaps the true reason for the reigning high prices of food in South Africa. The country’s Bureau for Food and Agricultural Policy has even gone one up and delineated the currency as the culprit. Among other reasons, it states that: 

• In fall, 2022, the Rand sharply declined in value, causing a spike in import price for grains, with similar consequences on the local grain market.

• The geographical and political contexts influenced by the war in Ukraine, itself a major grain hub of Europe, is pushing up food costs. 
• The deteriorating weather conditions in traditional import zones of the world, in particular South America have affected prices negatively.
• The disruption of distribution channels, just now reorganizing themselves after the Covid-19 setback is also causing after-effects on prices.

When did food prices begin rising in South Africa?

The current state of affairs can be traced back to the start of the Covid-19 crisis, or at least for South Africa, in March 2020. That month, panic caused a food price spike of 5.8% but a lull followed for several months afterward. In fact, food prices from April 2020 through July of the year went down, steadily. 

Then in August that same year, analysts noted a sudden rise albeit at a lower margin than that of March. The price climb began at 1.7 percent from July through August, 2020. South Africa installed a lockdown for five months and these months contributed somehow to today’s bleak state for in the course of the lockdown duration, staple food items spiked by 8 percent. This would be the start of a long climb of the primary cost of principle food items like grains, to the current levels of 14 percent inflation levels in the first quarter of 2023.  

The current state of food prices in South Africa 

Following low harvests, point of origin prices have been rising steadily and by March, 2023, producer prices edged from 125.10 points to 125.90 points. This has had a direct influence on the consumer prices of major staples, which climbed from 105.90 to 106.80 points, at an inflation appreciation rate of 13.60% (in 2022), to 14%  this year.

The United Nations food arms of FAO and World Food Programme (WFP) have fortified their food aid work in not only South Africa but neighboring countries, like Malawi.The global watchdog cites low harvests as a major factor of what is happening now in this region which harbors one of the biggest economies in Africa.

The UN estimates 27.4 million as the total regional population in need of aid for the next half year, including Malawi, Zimbabwe and South Africa. Farmers in these countries have no crop revenues from the past harvest season with which to manage seed purchase for the next season. They also lack money for soil additives such as fertilizer, hence the need for aid.

One survey reported that one in ten South Africans may go hungry each day meaning that 11 percent of the affected 6.5 million in the country will be on the line, if this trend continues. This is also affecting other sectors affiliated to food, like energy. 

Indeed, the country has already cited load-shedding or power rationing as another contributing  factor for the rising food prices. Nowadays, power outages have become common in South Africa and are pushing prices of energy-dependent cheap foods like chicken meat up. A farmer told a news agency in January that she had to dispose of 40,000 hens which had died due to power outage in their incubation place.

To measure the effect on the current prices of basic foodstuff, you need only take the price of bread to gauge the rest. A typical loaf of bread costs 14.50 Rand ($0.79) in wholesale, but in retail it ranges from R17 to R18 ($0.93 – $0.98). This is in a context of a price of between R3.95 and R5 ($0.22 – $0.27) in previous years.