CAPE TOWN: The benefits of the uptick in agricultural production is already reflecting in producer price inflation, this was determined after data released showed that South Africa’s food producer price inflation slowed to 5.7% y/y in May 2017 from 6.4% in April 2017. This suggests that consumer food price inflation could moderate over the coming months, as lower producer prices are transmitted to the retail and consumption end of the food chain.The slowing trend in food producer inflation is due to the recovery in the agricultural production.
The production of summer grains and oilseeds in total is estimated at 18 million tonnes, which is a 92% annual recovery. However, the reduction in food producer inflation was expected given the fall in agricultural commodity prices. White maize spot price currently trades at levels around R1,678 tonnes, which is a 64% lower than the same period last year, while yellow maize spot price is trading at levels around R1, 804 per tonne, which puts it at 50% lower than the same period last year.
