The effect of the widespread El Niño-linked drought on agricultural production in 2024, particularly regarding primary cereal food staples, is a key upside risk to food inflation in the coming months. Already, prices of white maize, which account for about one-fifth of the average person’s calorie intake in Southern Africa, were at record or near-record highs in several countries, notably South Africa, a key source of supplies for neighbouring countries. Retail prices of rice have also been increasing in previous months, reflecting higher year-on-year prices on the international market, considering the net-importing status of the subregion.

In South Africa, the wholesale price of white maize grain reached an all‑time high in April 2024 as the drought sharply cut harvest expectations of the 2024 crop; the white maize output is forecast to drop by about 20 percent compared to the previous five-year average. Rainfall deficits were less severe over yellow maize growing areas and consequently production is foreseen to fall by only 2 percent compared to the average. Correspondingly, increases in the wholesale yellow maize price have been more subdued, but nevertheless, prices remained about 12 percent higher year-on-year. By contrast, wholesale wheat prices were broadly unchanged in April and at lower year-on-year levels. South Africa is a net importer of wheat, and the current domestic price trend reflects stable levels on the international market. At the retail level, the South African food inflation rate slowed to 5.1 percent in March 2024, the lowest level since September 2020, reflecting a deceleration in the prices of most food products. However, the recent and steep uptick in white maize prices could eventually filter down to the retail level, and this remains a key risk to food inflation rates, particularly considering the comparatively large weight of maize products in the consumer price index. In the net cereal importing countries of Botswana, Eswatini, Lesotho and Namibia, retail prices of maize meal remained mostly stable in March 2024, but the high prices in South Africa, the countries’ main source of grain supplies, may exert upward pressure in the coming months. In Malawi, the average national price of maize fell for a third consecutive month in April, although prices remained 25 percent higher on a yearly basis. Production of maize and cereal crops in general, is expected to fall in 2024 due to prolonged periods of rainfall deficits and a low domestic harvest is likely to put upward pressure on food prices in 2024. Similarly due to the impact of drought conditions, cereal harvest expectations in Zambia are poor. Notwithstanding a small dip in the average price of maize grain in April, prices of this grain remained at near-record highs and a low harvest this year is anticipated to exert upward pressure on prices in 2024. Currency weakness is also foreseen to continue to play a key role in sustaining elevated price levels. The authorities in Zimbabwe introduced a new currency at the end of April, the Zimbabwe Gold, with a key intention to help stabilize the exchange rate. As of March, the annual food inflation rate was estimated at 100 percent. Whilst the weakness of the preceding currency was a key driver of the high inflation rates, the expected drop in the domestic harvest in 2024 is foreseen to be a prominent factor pressuring food prices this year. Latest price data from Angola showed that the annual inflation rate continued to increase as of March 2024. The removal of fuel subsidies in 2023 has been a fundamental contributory factor, pushing up production and distribution costs. The government cut the value added tax (VAT) on food from 14 to 5 percent in an effort to help contain price increases of food products.