Why Christmas lunch will cost more in South Africa this year

South African Christmas lunches may be unique to each family, with different special recipes and hidden ingredients – but it is an undeniably expensive ordeal for everyone.

Unfortunately, this year the cost of a good steak, a lamb stew or a simple roast chicken will set you back more than last year. This comes after consumers faced an onslaught of rising food prices, especially red meat prices.

Data provided from Absa’s latest Agritrends report for 2022 found that over the past 12-18 months, livestock and meat prices increased so rapidly at such high rates that the phenomenon of “meatflation” was coined by analysts.

Regarding beef, a decrease in the number of slaughters this year, paired with the rapid spread of diseases like Foot and Mouth Disease, drastically affected the price of beef. The supply of store-ready beef was constrained amid high production costs and high production risk, reported Absa.

As a result, when looking at R/kg for Class A meat, which is very tender, Absa forecasts prices to sit at R59.15/kg by the end of this year – up R6.67 from last year.

Lower-grade Class C beef has also seen a price increase from 2021, going from R45.41/kg a year ago to a predicted R47.70/kg around the end of December.

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Despite this, Absa expects the overall carcass price of cows to draw back in 2023 from the highs it reached this year due to constrained economic growth and ongoing pressures on consumers’ disposable income.

The bank added that lower grain prices and increased marketable animals would also continue this easing trend. Summarily, if you are eating beef for Christmas this year, it may cost more than the last year – but 2023 looks more promising.

Absa reported that lamb and mutton prices are strongly linked to beef prices, with a correlation of around 80%. This suggests that high beef prices could provide room for lamb prices to also increase substantially towards the end of 2022.

Lamb and mutton farmers are rebuilding flocks in light of better farming conditions, said Absa. This, in turn, restricts the number of animals available for slaughter, squeezing supply while demand remains the same.

Class A lamb cost R86.98/kg at the end of 2021. However, this has had a massive jump, forecast to settle at R95.20/kg by the end of this year. Class C lamb is also expected to increase from R69.14/kg to R72.80/kg.

South Africa’s chicken supply relies on exportation for roughly 20% of all domestic consumption, reported Absa. In light of this, the local market is closely tied to and reliant on the global market.

Chicken prices have been increasing globally since mid-2020 on the back of high input costs and supply constraints related to disease outbreaks in the EU, said Absa. Due to these factors, a global shortage of poultry products has kept prices high.

“To date, an influx of cheap imported products seems limited.”

A frozen bird at the end of 2021 set back consumers R29.22/kg. Absa forecasts that at the end of 2022, the same frozen bird will cost R31.95/kg.

Slight reprieve

Christmas gammon, a staple for some South African families, might offer an alternative to the other meat options.

Since highs at the start of 2021, pork prices have returned to lower levels, comparable to those in months leading up to the pandemic. They have not since experienced elevated prices apparent in red meat products, reported Absa.

South Africa’s domestic increase in production also drove the price down; demand for pork is noticeably smaller than other meat protein products – leading to a rapid reduction in prices.

Absa forecasts pork to settle at R27.15/kg at the end of this year – down from R29.64/kg the year prior. Bacon will also see a significant decrease from R28.00/kg in 2021 to R26.20/kg this year, forecasts Absa.

Consumers should jump on the new pork prices as they will not last long. Absa forecasts a rebound in prices over 2023 due to an adjustment to cost pressures in the form of lower supply. The increases are expected to be marginal in the years to come.

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