Rising fuel and electricity prices and a weaker rand could feed into higher food inflation, but economists expect the uptick to be relatively moderate.
Pioneer Foods CEO Tertius Carstens says: "We anticipate more inflation to be evident in the near term - driven by exchange rate movement and the knock-on effect on fuel and most raw material input costs. The main risk for near-term inflation remains the exchange rate."
Speaking on the sidelines of the pre-harvest briefing hosted by FNB this week, Jannie de Villiers, CEO of Grain SA, says he does not see prices increasing above current levels but some winter frost could result in a reduced crop, which could result in SA importing a bit more, which would lead to small price hikes.
"Grain-mill products, your maize meal, your bread, those things might increase a little bit going into the year ahead."
He also says there may be an increase in the price of maize meal.
Wandile Sihlobo, chief economist of the Agricultural Business Chamber of SA, agrees that inflation is unlikely to rise significantly, saying: "Food-price inflation could average at about 5% this year."
He says that despite prices for both yellow and white maize having risen more than 40% over the past year, the net effect will only become serious if the price reaches the critical point of R4,000 a ton.
Overall food inflation is mitigated by decreases in the price of some items; meat prices, for example, have experienced downward pressure over the past year.
"After a slump early in the year due to the outbreak of foot-and-mouth disease, it is expected that the sector will recover modestly in the second half of 2019," said Paul Makube, senior agricultural economist at FNB.
The department of agriculture, forestry & fisheries says it has negotiated revised veterinary certificates so beef exports can resume to markets such as Bahrain, Qatar, Egypt, the UAE, Kuwait, Jordan, Lesotho, Swaziland and Mozambique.
The South African Reserve Bank's monetary policy committee this week decided to keep the repo rate steady at 6.75%. In his address, Bank governor Lesetja Kganyago said: "Food-price inflation is expected to bottom out in the first quarter of 2019 and to peak at 5.9% in the second quarter of 2020."..