The rising cost of poultry, a main protein source for South African consumers, is likely to slow to a 1% annual pace for some goods. This is a dramatic decrease from the double-digit inflation rates observed in recent years. According to Absa’s AgriTrends study, higher poultry production in Brazil and a strengthening rand are driving this positive trend. While chicken costs are unlikely to fall, existing patterns indicate that they will stay affordable for South African households.
According to Absa’s report, a stronger rand coupled with robust growth in poultry production by key global suppliers like Brazil could result in a marginal increase of just over 1% in the average price of chicken products this year. The past two years have witnessed double-digit poultry price increases in South Africa, exacerbating the broader food inflation crisis and straining household budgets, particularly for those in lower-income brackets.
Dr. Marlene Louw, Senior Economist at Absa AgriBusiness, highlighted the impact of disease outbreaks like avian influenza on the global poultry supply, which has driven up prices. However, she expressed optimism that lower feed prices would improve producer margins, stimulating supply and potentially mitigating price increases in the medium term.
Chicken constitutes approximately two-thirds of South Africa’s meat consumption, making it a vital protein source for low-income and working-class households. While 20% of South Africa’s chicken, primarily frozen portions, is imported, the majority of the supply comes from Brazil. The combination of increased production from Brazil and a stronger rand is expected to temper chicken price inflation.
Absa’s report forecasts a slowdown in poultry price increases following double-digit growth in 2022 and 2023. However, the report also acknowledges the potential impact of ongoing disease outbreaks, which could disrupt traditional trade patterns and exert upward pressure on prices.
Overall, South African food inflation has exhibited a downward trend, with the annual rate declining to 3.9% in July from 4.1% in June. This represents the lowest level since January 2020. The anticipated moderation in poultry prices offers some relief to consumers grappling with rising living costs.
