Food Prices have, for the third quarter of this year, generated concern among consumers and government officials as increasing food costs continue to put pressure on household disposable incomes. STATSSA announced the Consumer Price Index (CPI) for June 2007 to be 143.0, reflecting a year-on-year inflation rate of 7.0% - just 1% above the target inflation rate set by the Reserve Bank. However, when the food price inflation is calculated for the all the food items in the CPI basket, it stands at 9.5%, indicating that food prices increased between June 2006 and June 2007 faster than the current inflation rate and substantially above the inflation target of 6%. Many are in the process of trying to understand and/or identify the main factor(s) underlying increasing food prices. This media release attempts to do the same by providing further detail and analysis of the price levels and trends. Since we are issuing this release ahead of the STATSSA CPI release for July 2007 later this month and given the trends reported below it is almost certain that food prices will put upward pressure on inflation for July 2007.
This is the first media release to also include the rural food price trends compiled by the NAMC. A straight comparison should be carefully made or avoided as the rural food price trends cover the period from January 2007 to July 2007 as opposed to urban food price trends covering the period from July 2006 to July 2007.
The first section of this media release reports on the nominal year-on-year (July 2006 to July 2007) and January to July 2007 price changes for the major food products in urban areas compiled by the NAMC. It also highlights products whose prices have increased by more than the inflation target of 6%. The second section provides January to July 2007 price changes for the majority of food prices gathered by the NAMC for rural areas. The third section gives a detailed discussion on global food prices and its impact on domestic food production. In the final section of this report we also provide an outlook of what can be expected with regard to food price trends in the next quarter.