While food inflation is expected to remain low in South Africa for the rest of 2026, and this year's crop yields are already bumper, warnings are sounding for 2027.
While food inflation is expected to remain low in South Africa for the rest of 2026, and this year’s crop yields are already bumper, economists are raising early red flags for 2027.
According to the Agricultural Business Chamber of South Africa (Agbiz) Chief Economist, Wandile Sihlobo, the ongoing war between the United States and Iran, as well as the incoming super El Niño weather conditions, are the primary concerns.
Food inflation in South Africa has been a saving grace for headline inflation this year. While CPI has been running hot—hitting as high as 5%—due to the sharp rise in fuel prices, food prices have been muted.
Stats SA’s July 2026 numbers showed that consumer food inflation had slowed to just 0.6%, down from 1.4% in June. This was the lowest point for food inflation since 2010.
Notably, grain-related products, fruits and nuts, and vegetables were showing price deflation.
Sihlobo said this was thanks to large supplies from an excellent harvest driven by La Niña weather patterns, which brought heavy rains.
Meat prices also slowed significantly as slaughtering continued and supplies recovered from the Foot and Mouth Disease outbreak.
While the fight against FMD continues, the vaccination drive is gaining momentum, and the recovery is evident, Sihlobo said.
Notably, while the FMD outbreak is ongoing, meat exports are closed off, resulting in a larger local supply.
The upside for South African consumers is that this trajectory is expected to continue through the rest of 2026, with ample harvests and meat stocks up.
Even as fuel prices remain a pressure point, these should keep food prices in check, at least for now, Sihlobo said.
However, looking beyond 2026, the outlook becomes a bit darker.
“The US-Iran war and risks in the Strait of Hormuz remain the major near-term risks, likely leading to higher fuel costs,” the economist noted.
“The medium-term risk is the forecast El Niño drought, [which may] affect the direction of 2027 food price inflation.”
Agbiz Chief Economist, Wandile Sihlobo
According to Sihlobo, the inflationary pressure from fuel stems from fuel accounting for a substantial share of the distribution costs of food products.
He noted that 80% of staple food products are transported by road—so when the diesel price, in particular, rises, so too do the costs of distribution.
The latest data from the Central Energy Fund shows that diesel prices are in for another R2.75 to R3.00 per litre hike in September.
This would push the diesel price to be almost R11.50 per litre more than before the US-Iran War began at the end of February.
It would take a complete end to the conflict and months of market progress to reverse the shock. Until then, the impact on fuel and fertiliser prices will continue to be felt.
At the same time, the agriculture sector will have to contend with the El Niño, which poses a “profound challenge” for South Africa.
Sihlobo noted that the El Niño will only impact the 2026/27 summer grain crop, which will be planted from October 2026.
This harvest will only enter markets in mid-2027, he said, kicking the potential impact on inflation further down the road.
“If the heatwaves we see in the northern hemisphere are any indication, then the upcoming summer crop season may be profoundly challenging for South Africa’s agriculture,” he said.
In the shorter term, South Africa is better placed than some regions of the world to deal with the pressures, the economist said.
But heading into 2027, the outlook is a little bit darker.
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