Food inflation plunged to its lowest in 14 years, while the unemployment crisis in the country worsened, as 133 000 jobs in the formal non-agricultural sectors were lost in the third quarter of 2024. Photographer: Ayanda Ndamane/ Independent Newspapers.
The latest health check on South Africa’s economy from this past week was a mixed bag for consumers as the latest data released on employment and inflation in the country made for both, good and alarming reading.
Food inflation plunged to its lowest in 14 years, while the unemployment crisis in the country worsened, as 133 000 jobs in the formal non-agricultural sectors were lost in the third quarter of 2024 as both full-time and part-time employment declined on the back of subdued economic activity.
This was according to Statistics South Africa (StatsSA), which released the data this past week.
The data comes hot of the heels of the fuel price increases announced for the month of December.
There will be some festive cheer for South Africans as the cooling inflation levels could result in Christmas delicacies such as pap, egg salad, baked goods and cold drinks becoming more affordable this year
The moderation came mainly from food prices, which slowed to 1.6% year-on-year in November, its lowest level since December 2010, when it stood at 1.6%.
Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa (Agbiz), said the sharp deceleration was partly attributed to base effects as food price inflation was particularly high a year ago.
“In November 2023, vegetable prices surged due to supply constraints from load-shedding disruptions, while the avian influenza outbreak constrained egg supplies and exacerbated meat price risks,” Sihlobo said.
“This year, improved supply conditions have led to price deflation in both vegetables and meat.”
Sihlobo said another factor contributing to the slowdown was the normalisation of grain prices.
“Last year, India’s rice export ban caused a spike in global rice prices, but the resumption of exports this year has eased pressure. Lower wheat prices have also helped moderate grain-related product prices,” he said.
On Thursday, however, StatsSA said in its Quarterly Employment Statistics (QES) survey, total employment in the formal non-agricultural sector fell by 133 000, or a 1.2% decline quarter-on-quarter, bringing the level of employment from 10.74 million in June to 10.6 million in September.
The latest employment numbers align with the quarterly economic contraction of 0.3% recorded in the third quarter, with many of the jobs shed in community services, primarily reflecting part-time jobs lost between the two quarters.
“The outcome is reflective of a still largely subdued economy, which continues to face a number of challenges, notably on the logistics front,” said Lara Hodes, economist at Investec.
“The hastened implementation of key reforms by the new Government of National Unity (GNU) is imperative to lift sentiment, driving a sustainable increase in growth and job creation.”
According to the survey 294 000 jobs were lost between September 2023 and September 2024.
“The community services industry experienced the most significant job losses, shedding 131 000 jobs. This was followed by the business services industry, which lost 15 000 jobs during the same period,” said Stats SA.
“Other sectors also faced declines, with manufacturing down by 4 000 jobs, transport by 3 000 jobs, mining by 2 000 jobs, and electricity by 1 000 jobs. Despite the overall decline in employment, the trade and construction industries saw increases of 19 000 and 4 000 jobs, respectively.”
According to the QES survey, full-time employment decreased by 14 000 jobs, falling from 9 468 000 in the second quarter of 2024 to 9 454 000 in the third quarter of 2024.
Looking ahead to next year, however, South Africans can expect to enjoy further interest rate cuts by the South African Reserve Bank (SARB), on the back of inflation cooling.
Headline inflation still remains below the lower end of the central bank’s 3-6% target range.
The SARB last month announced a second consecutive 25 basis points cut to interest rates, taking the repurchase rate from 8% to 7.75% and the prime lending rate from 11.5% to 11.25% per annum, after headline consumer inflation fell to 2.8% in October.
Nedbank economist Johannes (Matimba) Khosa, said, “The threat of electricity tariffs and other administered prices rising more than expected and wages outpacing productivity could also exert pressure. Despite these risks, inflation is expected to hover around the SARB’s 4.5% target for much of next year and average 4% in 2025.
“The economic recovery is also unlikely to lead to significant demand pressure on prices. Consequently, we expect the SARB to cut interest rates by 75 basis points in 2025.”
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