Food inflation steady at 40.1% in September, but monthly pressures persist
Monthly, headline inflation remained flat at 0.1% month-on-month. This is good news as inflation continues to trend below the Sarb’s target midpoint of 4.5% which signals a potential further policy accommodation before the end of the year.
After ending its 8-month deceleration in August, food inflation surprised with a pause in September 2024 at 4.1% higher year-on-year. Again, food inflation remains at its lowest level in fifty months if we exclude the July 2024 outcome.
Strong gains in the fruit and vegetables categories with an uptick of 2.9% and 6.8% respectively year-on-year were offset by a modest deceleration in the bread and cereals, meat, sugar, sweets and desserts, other foods, as well as a continued decline in the oils and fats subcategory.
However, monthly pressures mainly from fruit and vegetable subindices saw food inflation edging 0.4% m/m in September from 0.2% in August.
Maize market: Supply and demand dynamics
Bread and cereals inflation continues to surprise on the downside despite the extreme upward pressure on current maize prices due to the near-term tight supply outlook from poor harvests in 2024.
The eighth 2023/24 maize harvest estimate came in just below the 13-million-tonne level at 12.80 million tonnes in the September update, with ending stocks of 955,282 tons as of 30 April 2025 that would yield availability of just one month, according to the South African Supply and Demand Estimates (SASDE) report.
In September, average white maize prices increased by 2.8% month-on-month and 41% year-on-year to R5,510/ tonne, while their yellow counterpart was up 2.2% month-on-month and 8.7% year-on-year to R4,159/ tonne. The strong import demand for the white maize category from the Southern Africa region continued to provide further upside pressure on prices.
Vegetable inflation strengthened further as expected due to the impact of the earlier inclement weather on big-ticket items such as potatoes and tomatoes. However, the improved near-term supplies of these vegetables will help moderate prices as we head into the December festive season.
Looking ahead: Future price outlook
Nonetheless, given the combination of the improved weather outlook with the La Niña weather pattern in the 2024/25 agriculture season forecast, a strong global supply outlook, and a renewed rand exchange rate, we can expect prices to moderate across most commodities for the year ahead. For example, white maize futures for July 2025 delivery are already trading at low levels of R3,789/ ton relative to the current spot price of R5,623/ tonne.
Further, the global grain balance sheet remains solid after the improvement in wheat and rice thus placing downward pressure on international prices.
