Why are food prices so high? Inside South Africa's grocery wars

With the rising cost of living, South African consumers will be looking at different ways to save money, including the retailers that have the cheapest grocery baskets.

The Pietermaritzburg Economic Justice and Dignity (PMBEJD) Household Affordability Index showed that month-on-month, the average cost of the foods prioritsed and bought first in the household food basket rose by R28.49 (1,0%) from R2,908.14 in December 2024 to R2,936.63 in January 2025.

Year-on-year, the average cost of the foods prioritised and bought first in the household food basket increased by R99.07 (3,5%) from R2,837.56 in January 2024 to R2,936.63 in January 2025.

The cost of the National Agricultural Marketing Council's (NAMC) food basket increased by 0.6% between November 2024 and December 2024 from R1,287.17 to R1,294.42.

Year-on-year, between December 2023 and December 2024, the cost of the food basket increased by 4.4%, from R1,239.59 to R1,294.42.

Using 24 of the 28 items that can be found in the NAMC food basket, IOL has compared the costs of various items that can be found at some of South Africa's most popular retailers. 

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What has an impact on food prices?

Locally, the impact of global market trends, exchange rates, and supply-demand dynamics played a major role in shaping commodity prices in 2024, according to Casey Sprake, Economist, Anchor Capital. 

Sprake said that weather events such as El Niño led to a drop in maize production, primarily white maize, which saw the price hike due to lower local supply and higher demand from Southern Africa, however, yellow maize imports helped to ease the local shortfall.

"Meat prices were influenced by factors such as animal diseases, exchange rates, and seasonal supply fluctuations, with poultry prices easing after an avian influenza recovery, while pig meat prices saw a marginal rise. A strong export performance and rising global prices boosted local prices in the beef sector," Sprake said.

"Dairy prices eased as a stable electricity supply enabled increased milk production, while seasonal factors and extreme weather conditions influenced fruit and vegetable prices."

Considering the current low levels of food inflation and the uncertainty surrounding SA’s summer crop due to a tough start to the season, grain and oilseed product prices are expected to remain high throughout Q1 2025.

Sprake said: "This price elevation will likely contribute to some increase in food inflation, although the rise will be relatively modest due to the low inflation starting point."

"However, the duration of these elevated prices will be primarily influenced by the size and performance of the summer crop. If the widespread rains that fell in January continue through February and March, it is anticipated that food inflation will begin to stabilise in 2Q25 as crop yields improve and supply conditions normalise."

The exchange rate also plays a significant role in shaping food inflation, impacting the cost of products heavily traded in the global market.

Since the inauguration of US President Donald Trump, global uncertainty has been on the rise.

This, combined with Trump’s recent attacks on SA government policies as well as concerns about the stability of SA's Government of National Unity (GNU), has put pressure on the rand versus the US dollar exchange rate.

"If pressure on the local currency intensifies, food inflation could increase, as imported goods and global commodity prices would become more expensive," Sprake said. 

"Conversely, if the rand strengthens further, it could ease pressure on food prices and help reduce inflationary pressures in the domestic food sector. Thus, the direction of the exchange rate will be a key determinant of how SA food inflation evolves over the coming months."

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