The latest update on South Africa’s food inflation showed a further acceleration as vegetables and meat prices quickened in May 2025. South Africa’s annual food inflation jumped again by 1.1 percentage points (ppts) from the previous month to 4.4% year-on-year (y/y) in May 2025.
However, monthly food inflation slowed to 1.2% month-on-month (m/m) in May relative to 1.3% m/m in April 2025. Nonetheless, headline consumer inflation remained well contained after a surprised pause at 2.8% y/y in May 2025, with the monthly trend still flat and decelerating below 1% at 0.2% m/m.
While the fruits and nuts inflation posted the biggest annual increase of 6.2ppts from April to 13.5% y/y in May, it fell for the third consecutive month to -1.3% m/m which reflects the current favourable supply situation following excellent seasonal production conditions.
Earlier weather-induced supply constraints with harvest and logistics delays caused a surge in vegetable inflation to 10.3% y/y (+5.8ppts) and 5.9% m/m (+1.2ppts) in May 2025. The rally in meat prices continued on the back of tight supplies, thus lifting meat inflation by 1.2ppts from April to a 23-month high of 4.4% y/y in May 2025. Monthly, meat inflation however decelerated to 2.3% m/m in April to 1.2% in May 2025.
We are not surprised at this development as prices at producer level surged across the livestock complex with average class A beef carcass prices breaching the R70/kg level for the first time in history. Prices accelerated despite the disease outbreaks that have now complicated the price outlook and the domestic supply dynamics.
The foot‑and-mouth disease (FMD) outbreak is now in full swing, resulting in an export ban and a quarantine of affected establishments. The quarantine has created a short supply crunch due to the inability to slaughter.
Further, the constrained import supplies due to avian influenza (AI)-induced ban on South Africa’s biggest poultry meat supplier Brazil elicited further upside for prices particularly the mechanically deboned meat (MDM) which is used in the manufacturing of products such as polony, etc. SA is a net importer of MDM due to lack of domestic capacity.
Meanwhile, the bread and cereals inflation continued to surprise on the downside after decelerating to 4.5% y/y and only nudging 0.1ppt from April to 0.4% m/m in May 2025. It is apparent that the lag effect of supply shock and the consequent spike in grain prices in the past eight months did fully materialise.
Globally, food inflation as per the United Nation’s Food and Agriculture Organization (FAO) decelerated sharply by 2ppts from April to 6% y/y in May 2025 as declines in cereal, vegetables, and sugar prices more than outweighed gains in the animal protein categories (dairy, meat). Strong global demand boosted the monthly bovine, ovine, and pig meat prices which advanced by 1%, 8.3%, and 2.3% m/m respectively in May.
However, global pig meat inflation remained in deflationary mode for the fourteenth consecutive month at ‑0.4% y/y while bovine and ovine meats were sharply higher by 11.8% and 29.7% y/y respectively. AI hammered the poultry market as import bans from some countries and the subsequent oversupply forced a reduction in quotations from Brazil. Poultry meat came in at -0.8% m/m but accelerated to 3.3% y/y in May from 2.6% y/y in April.
On a parting note, the combination of a renewed rand exchange rate appreciation and a decent summer crop harvest outlook poses a downside risk to most agriculture commodities for the year ahead.
Further, meat prices are increasingly surging into consumer resistance territory and may not sustain these levels for a longer period given the timid economic growth and subdued consumer buying power. Nonetheless, the continued downside at the pump with fuel falling by 14% y/y as well as a flat to lower interest rate outlook bodes well for consumer financial recovery for the remainder of the year.
