According to Statistics South Africa, South Africa’s consumers breathed a sigh of relief as headline inflation steadied to 5.2% year-on-year in May 2024. Food inflation, however, decelerated further to 4.3% year-on-year in May 2024 from 4.4% in April 2024 underpinned by declines in bread and cereals, milk, eggs and cheese, oils and fats, and sugar, sweets, and desserts prices.

However, drilling deeper into the data shows a continued stickiness on the upside for coffee products.

Rebound in ground coffee

Instant coffee (250g) rose by 2.1% month-on-month and was sharply higher by 30.6% year-on-year at R63.28. After posting marginal monthly gains in the prior two months, ground coffee or coffee beans (250g) strongly rebounded 4.9% month-on-month at R105.30 in May 2024 which is 12.7% higher year-on-year relative to 6.8% year-on-year in April.

Cappuccino prices however slowed to 0.3% month-on-month in May from 1.5% previously and were 8.2% higher year-on-year relative to April’s 9.7% year-on-year at R78.28 (10x18 gram).

This reflects the supply tightness of the raw commodity on the global market as South Africa is a net importer.

Arabica coffee price surge

Arabica coffee prices surged by 24% year-on-year recently and back near the Russia-Ukraine war-induced record highs of 2022 due to concerns over the continued dry production conditions in Vietnam (robusta) coupled with below-average rainfall in the world’s largest arabica coffee supplier, Brazil.

Vietnam’s agriculture department earlier projected a 20% decline in the country’s coffee production to a four-year low of 1.47 million tonnes. The spillover crisis in the global cocoa market added to increased uncertainty and speculation in the market.

Although easing from the 2024 peak recently to US$9,278/ tonne, cocoa prices have increased by 121% year-on-year and a historical high for the commodity.

News out of the major cocoa producers is that the supply outlook remains tight with Ivory Coast’s 2023/24 production estimate cut by almost 22% year-on-year to 1.75 million tonnes.

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