A note on food inflation and El Nino fears

I am at the airport about to board a flight to Johannesburg from Cape Town. I scanned the Monetary Policy Statement from the South African Reserve Bank as I waited for my flight. Among other things, the risks of an El Niño weather event to food price inflation are highlighted, and I think the concerns are well placed.

Indeed, in the near term, we are okay. South Africa is likely to have its largest-ever summer grain and oilseed harvest in the 2025-26 production season. This is due to the expansion of cultivated areas and the high yields from favourable summer rains.

The data recently released by the Crop Estimates Committee place the country’s 2025-26 summer grain and oilseed harvest at 21 million tonnes, 3% up year-on-year (y/y).

This yearly improvement in the overall harvest is underpinned by upward revisions to major grains and oilseeds, particularly maize, soybeans, and sunflower seed. 

 

Still going into 2027, there are risks. The expected El Niño weather phenomenon will impact the 2026-27 summer crop season, which we will plant from October 2026. Its impact on food price inflation will be more visible in 2027. By the end of 2026, we may start to see a slight uptick in grain prices if there are clear signs of a likely drought. So, the SARB’s decision to highlight this risk is vital.

Again, for now, we remain with ample food and agricultural supplies in South Africa.

The additional risk for the season ahead is higher fertiliser prices, which also influence farmers' planting decisions, alongside weather risks.

For the near term, fuel remains a key issue to watch as about 90% of South Africa’s agricultural products and food are transported by road.

South Africa’s consumer food price inflation slowed to 2.8% in April 2026, down from 3.4% in March.