Food prices 'will rise again'

Food prices would rise gradually from next year, increasing the likelihood of more protests, the Agricultural Business Chamber said yesterday.

Households, especially lower income, spend a large chunk of their income on food.

Higher food prices in recent years have made it harder for millions of people to escape poverty.

John Purchase, chief executive of the chamber, said any spike in food prices could signal increased activism and possible strikes by labour federation Cosatu.

"While food prices are still coming down at the moment . it is going to bottom out probably within the next six months or so," he said on the sidelines of an agriculture conference.

"There will be gradual increases in food prices, we believe, again from 2011. How big that rise is,

is very difficult to predict," Purchase said.

South Africa's annual consumer price inflation slowed more than expected to a four-year low of 4.8% in April as food-price pressure eased, compared with March's 5.1%. Inflation has slowed sharply since peaking close to 14% in 2008.

Food-price inflation, the main driver at the time, trended downwards, slowing to 0.9% on an annual basis in April.

Cosatu and Fedusa - two of the largest union federations in the country - protested against high food prices in 2008.

Although the biggest economy in Africa has emerged from its first recession since 1992, household finances are tight after about a million jobs were shed and as debt levels remain high.

Purchase said the first sign of food inflation would be seen in the price of maize, which is expected to ease further in the short term, due partly to a bountiful harvest.

Tina Joemat-Pettersson, the minister of agriculture, said in April the country had secured foreign markets to sell surplus maize produced in the 2009-10 season to help safeguard maize prices for farmers.

Purchase said: "We have a big surplus of 4million tons, and if it's not all exported ... it's going to depress prices probably into the next season quite significantly. That's why I say there is going to be a time lag.

"As we see economic recovery taking place, we will probably see a bigger demand for resources, like oil and fertiliser." He said this would put pressure on demand for commodities such as maize, so driving up food prices.

An upturn in consumer spending power would add to the pressure, he said.