Major threat to food prices in South Africa 

The threat of rising food prices looms over South Africa and other emerging markets as weather patterns undergo significant changes.  

In South Africa, Consumer Price Inflation dropped from 6.8% in April to 6.3% in May, the lowest reading since April 2022. Food and non-alcoholic beverage inflation also decreased from 13.9% to 11.8% during the same period.  

The Bureau for Food and Agricultural Policy (BFAP) expects food inflation to continue trending downwards in the coming months due to strain on consumer budgets, high base effects, the recovery of the rand, and lower producer prices.  

However, Schroders, an equity fund, warns of the potential impact of an upcoming El Niño period. El Niño disrupts rainfall patterns and could lead to drier conditions in Southern Africa, affecting food production and prices.  

The development of El Niño in 2023 could result in drought conditions, reduced food supply locally and globally, and a potential rebound in food inflation in 2024, limiting the South African Reserve Bank’s ability to lower interest rates. 

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