Causality relationship between producer and consumer price indexes of selected meat commodities in South Africa from 1991 to 2023

The South African meat industry plays an important role in food provision, income generation, and economic stability. However, inflation-driven volatility in commodity markets has intensified the focus on the nexus between producer and consumer price indexes, as significant meat price changes affect both producers and consumers. Therefore, this study explored the association and the causality between consumer price index (CPI) meat and producer price index (PPI) beef, mutton, pork, and chicken from 1991 to 2023 using the Vector Error Correction Model (VECM) and Granger causality test. The findings of the study revealed a short- and a long-run relationship among the variables with an adjustment speed (ECT) of 67.67%. No causal relationship was found between PPI beef and CPI meat, while unidirectional relationships were identified between CPI meat and PPI chicken, pork, and mutton. These results suggest that consumer meat prices impact production prices for chicken, pork, and mutton, but not for beef, indicating that beef price changes are influenced by factors other than general meat price fluctuations. Thus, while price controls or subsidies may manage price changes in chicken, pork, and mutton, further research or targeted strategies are needed to address the unique factors influencing beef prices. Ultimately, understanding these dynamics will enhance price stability in the meat market, benefiting consumers, producers, and the overall stability of the South African economy.