Healthy Eating Is Getting More Expensive In SA

According to the latest 10-year agricultural outlook published by the Bureau for Food and Agricultural Policy, the cost of healthy eating as a percentage of monthly household expenditure is rising in South Africa, driving consumers towards cheaper food options.

Food inflation plays a central role in headline inflation, but is also an important metric to track in terms of access to sufficient and sufficiently nutritious food for households. The Bureau for Food and Agricultural Policy’s (BFAP) ‘Baseline Agricultural Outlook 2020 to 2029’ explores current and possible future trends in food inflation and their potential impact on household food security from an affordability perspective.

TRENDS IN FOOD INFLATION

For the past couple of years, BFAP has included a food inflation forecast in its baseline report that is in line with the statistical properties of the inflationary series in question (be it food inflation or one of its sub-categories). This has been done with relative confidence, as most inflationary series exhibit a degree of inertia that can be drawn on to forecast trends. This inertia is predominantly supported by demand-side trends that drive the longer-term trajectory of the series. Supply-side issues also play a role, but manifest more as shorter-term shocks away from longer-term demand-side trends.

As the country emerges from the strict COVID- 19 lockdown measures, however, it is unclear how these supply and demand dynamics will show up in metrics such as food inflation. In terms of demand, South African consumers have been under pressure from before the lockdown period, thus the restrictions intensified the economic pressures already evident from early 2019. The supply side, in turn, also experienced unprecedented shocks, such as a significant depreciation of the rand-US dollar exchange rate.