With the harvest underway across the subregion, maize grain prices posted moderate declines in several countries, as local market supplies were augmented with the newly-harvested crops. However, cereal production in 2024 is expected at below-average levels across the subregion and the anticipated shortfalls in supply remain a key upside risk to food inflation. Currency weakness also continues to play a key role in propping up elevated inflation rates.

In South Africa, wholesale prices of white maize grain dipped in May 2024 after reaching record highs in April. The recent decline follows a small upward revision to the production forecast at the end of April. However, the 2024 white maize harvest is still forecast to decrease 25 percent year-on-year, as the El Niño-linked drought sharply cut yield prospects. The prices of yellow maize, mainly used for feed, have risen at comparatively slower rates in recent months and were about 20 percent lower than white maize prices in May, albeit higher on a yearly basis. The wide gap between yellow and white maize prices is relatively rare and reflects diverging harvest prospects for each crop; areas growing yellow maize were less affected by the drought and consequently production is foreseen to only fall by about 13 percent year-on-year. The previous time such a divergence occurred was during the last strong El Niño event in the 2016/17 marketing year. Following moderate rises in the preceding two months, increases in wholesale wheat prices accelerated in May, but on an annual basis remained slightly lower. The recent steep uptick is driven by strengthening prices on the international market, reflecting South Africa net importing status for wheat, and preliminary indications pointing to a smaller wheat area for the 2024 crop compared to 2023’s level. In the net cereal importing countries of Botswana, Eswatini and Namibia, prices of maize meal remained stable for a second consecutive month in April. The prevailing high prices in South Africa, the countries’ main source of grain supplies, are likely to exert upward pressure in the coming months. In Zambia, prices of maize grain dropped marginally on a monthly basis in May with harvest pressure. However, the seasonal decline was lower than historical rates, reflecting a well below-average maize harvest. As a result, Zambia is forecast to become a net importer of maize in the 2024/25 marketing year and is likely to import in excess of 0.5 million tonnes. Continued currency weakness, which is already propping up high prices (the annual food inflation rate edged higher to 16 percent in May) combined with increased cereal import needs may accentuate imported inflationary pressure. In efforts to reign in inflationary pressure, the government raised the national policy rate in May, the second time this year. Authorities in Zimbabwe introduced a new currency at the end of April, the Zimbabwean gold, with a key intention to help stabilize the exchange rate. This introduction and the multi-currency regime, makes it challenging to assess year-to-year price movements. On a monthly basis, the current inflation rate estimates show that food prices declined moderately in May. The annual food inflation rate in Angola continued to rise in April and reached 33 percent, well above the rate in April 2023. The gradual removal of fuel subsidies in 2023 and 2024 is contributing to cost-push inflationary pressure, whilst the impact of the drought on domestic agricultural production is foreseen to add further upward pressure.