South Africa: Food and Fuel Feed Rising Inflation
South Africa’s annual consumer price index inflation rate surged to a 13-year high of 7.4 percent in June 2022, driven mainly by a rise in food and fuel prices. Fuel and food prices soared globally due to the Russia/Ukraine conflict that disrupted commodity markets. Food price inflation was exacerbated in South Africa by ongoing load shedding, or prolonged power outages, that have increased costs along the supply chain. As a result, South Africa’s food price inflation accelerated by 9.0 percent, the highest level since February 2017. The consumer prices of grain-related and vegetable oils products are expected to rise in the coming months, which will keep food inflation at relatively higher levels. To help curb the escalating inflation rate, the South African Reserve Bank increased the interest rate by 0.75 percent, rising borrowing costs to its highest level since March 2020.