Interview With SAfm About Food Price Inflation

I spoke to Hilton Tarrant (@hiltontarrant) about food price inflation in South Africa yesterday afternoon on SAfm market update. It was a pretty packed interview – we covered a lot of ground and I got into how low income households are going to be hit by rising maize prices in coming months, the risks this poses to social unrest, and the fact that the falling rand means South Africans on fixed salaries are becoming sharply poorer compared to their international peers, and that the weaker rand also means we’re giving our wealth and assets away to foreigners at a discount. You can listen to the interview at

Stats SA Food Prices vs Actual Food Prices

Earlier this week, Statistics SA announced in the CPI release that food prices climbed 3.5% in December from a year ago. According to prices that we track at ETM Analytics at four major retailers in the Fourways area of northern Johannesburg, food prices have climbed around 13% annualised since March last year.

The price of raw, whole chicken is up 37% since March, and the price of a 2.5kg bag of Ace maize meal is up more than 13%. Eggs are up 12%, salt 12%, lean beef mince 11%, rice 10%, Valpre water 9%, Pronutro 9%, Coca Cola 8.3%. If you’re a fan of the unhealthy stuff, you’re in luck. Cadbury TopDeck is only up 5%, white bread is only up 2.3%, and the price of 1kg white sugar is down 3%, despite the price of raw sugar falling 20% since March.

I don’t know what Stats SA is doing with prices that they collect and go into their models, but it sure looks very different to what I’m seeing.

The Retail Boom in SA

I’ve written about the consumer and retail boom in South Africa many times in recent years – most recently in “SA Mining at ‘Breaking Point'”, “South Africa’s Regressing Economy”, and “Impact of Real Interest Rates on Retail and Manufacturing.”

Retail spending is being funded mostly by borrowing from foreigners and locals selling assets to foreigners. We’re selling our capital stock to foreigners and spending the proceeds, not reinvesting it in manufacturing and productive capacity. A low-real interest rate environment means SA is living beyond its means. It’s a highly bearish long-term development for the SA economy.

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