South Africa’s Reserve Bank Governor Lesetja Kganyago has warned that the war in the Middle East will lead to higher fuel and food prices due to rising oil and fertiliser costs. He made the comments while attending the IMF and World Bank Spring Meetings in Washington DC. The impacts are expected to filter through the economy later this year.
Reserve Bank Governor Lesetja Kganyago stated that the Middle East war has significantly impacted oil prices, leading to higher domestic fuel costs for South African consumers.
Speaking at the International Monetary Fund and World Bank Spring Meetings in Washington DC, Kganyago explained that higher oil prices affect the agricultural sector, particularly through diesel use, and broader economic distribution. He noted that central banks typically look through such shocks unless evidence of broader price rises emerges.
The governor highlighted that the oil price shock is compounded by rising fertiliser costs, as production is energy-intensive and South Africa relies heavily on imports. "Fertilizer is very important in field crops," Kganyago said. "We are not dealing just with the oil price shock; you also deal with the shock from the fertilizer prices, and that would fit directly into food price inflation."
South Africa is currently out of its planting season, so the effects on food prices are anticipated later in the year. Kganyago mentioned reports that the Strait of Hormuz has reopened to commercial traffic, provided the ceasefire holds. The Reserve Bank continues to monitor data amid ongoing economic uncertainty from the conflict.