Food prices rising in South Africa are set to accelerate after the United Nations Food and Agriculture Organisation confirmed on Friday that the FAO Food Price Index climbed 2.4% in March, reaching a six-month high driven largely by the energy and fertiliser cost pressures generated by the ongoing US-Israel-Iran war. Vegetable oils recorded the sharpest increase at 5.1%, while wheat prices jumped 4.3%.
The FAO’s monthly index, which tracks international commodity prices across cereals, vegetable oils, dairy, meat and sugar, rose for the second consecutive month.
Palm oil prices hit their highest level since mid-2022 as crude oil prices climbed, and wheat prices were driven up by worsening crop prospects in the United States and expectations of lower plantings in Australia because fertiliser costs have made intensive farming less viable.
Why South African consumers will feel this
South Africa is a net importer of wheat and a consumer of palm oil in a wide range of processed foods, from bread to cooking oil to biscuits.
When global commodity prices rise in US dollar terms and the rand weakens simultaneously, the impact on rand-denominated grocery prices is compounded. The rand has been under pressure since the escalation of the Iran war in late February, and a weaker rand makes every dollar-priced commodity import more expensive for South African food manufacturers and retailers.
Consumers can expect the March commodity price increases to begin filtering through to supermarket shelf prices within four to eight weeks, depending on the size of each retailer’s existing stock buffer and their pricing strategies ahead of mid-year.
The fertiliser chain
A detail in the FAO report that has longer-term implications for South Africa’s domestic food production is the fertiliser cost pressure. If conflict persists beyond 40 days, the FAO warned, farmers globally may reduce fertiliser inputs, plant less, or switch to less input-intensive crops.
South Africa’s own grain farmers face a similar calculation, particularly in the maize belt, where nitrogen-based fertiliser prices are linked to global natural gas and oil prices.
The FAO said that broadly comfortable global cereal supplies were cushioning the immediate impact, but that the outlook for the rest of 2026 and into 2027 would depend heavily on how quickly the conflict is resolved.
The oil and fuel link
The same dynamic driving food costs higher is affecting South Africa’s petrol and diesel prices. Energy prices in March contributed directly to the vegetable oil price spike, and higher crude oil also feeds into South Africa’s fuel price mechanism via the basic fuel price calculation.
The Central Energy Fund publishes a daily indicator of the current over- or under-recovery, which determines how much pressure is building toward the next monthly fuel price adjustment.
A senior government official this week called for a reduction in the diesel price, citing the impact on logistics and transport costs that ultimately reach consumers. That call has not yet translated into a formal DMPR announcement.
What happens next
The FAO’s next monthly Food Price Index update is due in early May 2026 and will reflect April’s commodity price movements. South African consumers monitoring their household budgets should note that the combination of a weaker rand, higher global oil prices, and rising food commodity costs creates the conditions for a broad-based grocery price increase in the second quarter of 2026.
Swisher Post will continue tracking the FAO data and the rand/dollar rate in its weekly economy coverage.
