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Minister of Cooperative Governance and Traditional Affairs Des Van Rooyen. Picture Credit: Gallo Images
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food price set to rise further

By Kea' Modimoeng | Sep 01, 2009 | COMMENTS [ 0 ]

CONSUMERS already grappling with high food inflation can expect further increases in the price of food in coming months.

The Food Price Monitor for August, which was released by the National Agricultural Marketing Council, said food prices were expected to increase in the next few months owing to "pre-season uncertainty".

Though the price of beef, bread, maize meal and sunflower oil will increase, it will be at a much slower rate, says André Jooste, an economist at the council.

The report says local speculation about next season's planting and weather patterns will influence price movements. The possibility of an El Niño dry season must also be considered.

Typically meat prices should be moving into an upward trend by October and November, but this year the the trend could be "dampened by a significant positive shift in the supply of beef".

Beef supply is expected to increase over the next months due to the fact that many maize producers have opted not to sell their maize at a low market prices but rather use the maize as feed for their livestock.

The report also highlights that the cost of beef production has increased, which implies that any decrease in the price of beef owing to an increase in the supply can put prices under pressure. But the report's findings contradict economists' forecasts that food prices will drop during the next three months.

Mike Schussler of Economists.co.za says food prices are likely to decline but the El Niño effect will "make prices rise afterwards".

"This might result in people buying cheaper food items and cutting down on what they deem as luxury goods, which might include meat."


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