This moderate increase has confirmed the central bank’s prediction that struggling consumers may continue to get relief with food prices.
According to Bloomberg’s Shisa Nyama Index, the average price increase for a shisa nyama/ backyard braai (barbecue) was 6.2% compared to the same month last year. This is the same as December but much lower than the 10% increase observed in November.
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In comparison, overall food prices increased by 8.5% year-on-year in December, according to Statistics South Africa. The central bank expects food inflation to average 5.7% in 2024.
A price drop in these three food staples
Onions, cooking oil and samp have dropped in price and were the biggest contributors to the index remaining steady.
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The Shisa Nyama Index was created by the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD) in 2019, a non-profit organisation that works to promote economic justice in South Africa.
Bloomberg also began tracking the Index, and has been publishing monthly articles on it since 2022. The Index is used by policymakers, businesses and individuals to track the cost of living in South Africa.
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PMBEJD tracks the prices of 14 key ingredients in traditional backyard braais to compile its survey. Data collectors record food prices on the shelves of 47 supermarkets and 32 butcheries that target the low-income areas in Johannesburg, Durban, Cape Town, Pietermaritzburg, Springbok and Mtubatuba.
MPC needs inflation to trend lower
After the Monetary Policy Committee’s meeting on 25 January, Governor Lesetja Kganyago highlighted the need for inflation to trend lower to the midpoint of the 3% to 6% target band, even though inflation eased during the latter part of 2023.
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“There isn’t a discernible trend that shows that inflation is declining towards our target,” he said.
“For as long as there isn’t any sustained decline of inflation towards our target, and more importantly that inflation stays there in a sustained manner, don’t expect us to recalibrate policy.”
Good rainfall in South Africa at the end of 2023 and in January 2024 may have averted a drought from El Niño-induced weather conditions, potentially helping to keep food inflation under control.
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