Coffee Table Economics (CTE) with Anchor, by Casey Sprake, is distributed periodically. CTE is a compilation of Casey’s research, analysis, and perspectives on key South African (SA) and global economic data such as inflation, spending trends, and international market dynamics, including socio-political events and the multiple factors shaping the world economy.
Executive summary
In this week’s edition, we highlight the following:
- Coal’s stubborn grip in a changing energy landscape. Coal, often considered yesterday’s fuel, continues to power today’s world. In 2024, global electricity demand surged, driven by artificial intelligence (AI), data centres, and industrial growth. Yet, coal remained the single largest source of power, with China alone producing more than half the world’s supply. While renewables gain ground and advanced economies push cleaner transitions, emerging markets (EMs) continue to lean on coal as their growth engine. Coal’s stubborn grip still matters for the global economy.
- Confidence on empty: Why SA’s business sentiment still cannot fuel growth. The Rand Merchant Bank (RMB)/Bureau for Economic Research (BER) Business Confidence Index (BCI) slipped again in 3Q25 to 39, leaving more than 60% of firms dissatisfied with conditions. While there are pockets of resilience, vehicles and construction, retail, wholesale, and manufacturing are struggling under the weight of tariffs, inflation, and structural bottlenecks. Confidence remains too weak to spark the investment the economy so urgently needs – a reminder that without sentiment, growth has little fuel.
- Global harvests, local headaches: July’s food inflation uptick. SA’s food inflation quickened to 5.7% YoY in July, as meat, maize, and wheat costs piled fresh pressure onto household budgets. Beef and poultry surged on the back of disease outbreaks, while white maize and bread prices climbed despite softer global benchmarks. Even where vegetables offered relief, gains in dairy and fruit offset the difference, leaving grocery bills volatile and challenging to manage. For many families, the result is fewer affordable choices at checkout.
Coal’s stubborn grip in a changing energy landscape
Global energy demand accelerated in 2024, outpacing its long-term trend and reminding us that the world’s appetite for power continues to swell. Much of this growth came from the electricity sector, where demand rose nearly twice as fast as overall energy consumption. Rising industrial activity, a surge in cooling needs, transport electrification, and the relentless expansion of data centres and AI all contributed to this surge. In effect, electricity has become the bloodstream of modern economies, coursing through every sector from industry to households to digital infrastructure.
Yet despite the rapid growth of cleaner energy sources, the global power mix still leans heavily on fossil fuels. According to the International Energy Agency (IEA), nearly 60% of electricity worldwide was generated from fossil fuels in 2024, with coal alone accounting for 35%. Renewable energy has made steady progress, now providing about one-third of total electricity, but the energy balance sheet is still weighted toward traditional sources. The picture varies sharply across regions. In emerging and developing economies, coal remains the bedrock of power generation. China, the world’s largest energy consumer, sourced almost 60% of its electricity from coal last year. India leaned even more heavily on the resource, with close to three-quarters of its power generation tied to coal. These figures illustrate why coal continues to act as the workhorse of growth in fast-developing economies, even as policymakers pledge greener transitions.
In advanced economies, however, the story looks different. The EU has made substantial strides in clean energy adoption, with renewables generating nearly half of its electricity in 2024 – far above the global average. The US relied more on natural gas, which contributed over 40% of its power mix. Even so, coal remains politically charged: US President Donald Trump’s pro-coal policies, coupled with rising demand from AI-related energy needs, are expected to boost US coal output in the years ahead.
Global coal production reflected these crosscurrents. In 2024, output edged higher to 9.24bn tonnes, with the Asia-Pacific region dominating supply. China alone produced nearly 4.8bn tonnes, accounting for more than half of the world’s total. To put it in perspective, China’s 2024 coal production exceeded the combined output of the next ten largest producers. It is not only the biggest producer, but also the largest consumer and importer of coal – a reminder of how central coal remains to its energy system. India and Indonesia followed at a distance but still managed YoY production growth of c. 7% each. Among Western producers, the US led with 464mn tonnes, although output fell sharply (by 11.6%) compared with 2023. Australia and Russia also remained significant producers, each surpassing 400mn tonnes. Interestingly, many of these major producers are also among the most dependent on fossil fuels for their domestic power supply, suggesting that production and reliance remain deeply intertwined.
Beyond the giants, growth hotspots emerged in less-expected places. Mongolia recorded a remarkable 27.7% jump in coal production, while the Middle East region expanded by nearly 19%. Other countries (including Türkiye, Zimbabwe, Uzbekistan, and Pakistan) also saw substantial gains, underscoring how diverse the coal landscape has become. In contrast, most European nations, along with the US and Canada, posted double-digit declines in production, reflecting a deliberate pivot away from coal as part of their broader energy transition strategies.
The bottom line
Taken together, these dynamics highlight coal’s stubborn grip on the global energy mix. Renewables may be steadily advancing, but the world has not yet weaned itself off the resource that powered the industrial revolution. Coal remains both the backbone and the burden of the modern energy system: indispensable for now, but increasingly at odds with the future the world is striving to build. For investors, policymakers, and consumers alike, this is the paradox to watch- the world’s energy transition is underway, but the shadow of coal still looms large over the path ahead.
Confidence on empty: Why SA’s business sentiment still cannot fuel growth
The latest reading of the RMB/BER BCI provides yet another reminder of the fragile state of SA’s private sector sentiment. The index slipped by one point in 3Q25 to 39, following a steep five-point decline in the second quarter. While the movement may appear marginal, it leaves confidence below its long-term average of 42 and signals that more than 60% of respondents remain dissatisfied with prevailing business conditions. In other words, business sentiment is hovering in the lowlands, offering little oxygen for the investment activity the economy desperately needs. The BCI is not just a statistical curiosity. Compiled quarterly by the BER and sponsored by RMB, it captures the share of firms across five sectors (manufacturing, retail, wholesale, new vehicle trade, and building) that view business conditions as “satisfactory.” A reading above 50 implies optimism outweighs pessimism, while a reading below 50 indicates the opposite. For financial markets and investors, this makes the BCI a vital leading indicator: its trajectory has historically mirrored private sector investment cycles. When sentiment improves, firms tend to expand capital spending; when it falters, investment retreats.
The 3Q25 survey took place between 6 and 25 August, coinciding with a period of both domestic and global crosswinds. On the international front, the start of steep 30% tariffs on domestic exports to the US weighed on sentiment, particularly in the automotive sector, where front-loading, cancellations, and production stoppages distorted normal activity. Locally, the backdrop was somewhat less dramatic than earlier in the year. The South African Reserve Bank’s (SARB) late-July decision to cut interest rates by 25 bpts provided welcome relief to interest-rate-sensitive sectors, and its signal of a new 3% inflation target introduced the possibility of further easing down the line. Yet these positives were offset by the reality of consumer inflation ticking up again in July, alongside the well-worn headwinds of unreliable electricity, weak logistics, and rising costs.
Beneath the largely flat headline figure lay some unusually sharp movements across individual sectors:
- New vehicle dealers emerged as a relatively bright spot, with confidence climbing to 54 – the second time this year sentiment has moved into positive territory. Robust sales volumes (up 14.5% YTD) and the recent rate cut buoyed demand, though gains were skewed toward budget-friendly vehicles as premium sales softened.
- Building contractors also enjoyed a lift, with confidence rising by 11 points to 46. Non-residential projects remain the engine of activity, but even residential builders reported being a little less pessimistic, a welcome change after a weak second quarter.
- By contrast, wholesalers surrendered their leadership position, with confidence slipping to 38 after a five-quarter streak of relative strength. Consumer goods volumes in particular faltered.
- Retailers endured a steeper decline, with sentiment falling to 32 — its lowest in nearly two years. Pockets of resilience remain, particularly among higher-income consumers and in furniture retail, but the broader environment has weakened.
- At the bottom of the pack, manufacturers saw confidence slump to 23, a reflection of the complex global trade environment and tariff uncertainty, even as some activity indicators edged back toward long-term averages.
Taken together, these results are sobering. The BCI has averaged around 39 since 2021, suggesting that SA’s private sector has been caught in a prolonged “muddle-through” phase. While there are isolated signs of resilience, confidence levels remain too low to spur the sustained investment required to lift the country’s potential growth and employment trajectory. For investors, this is akin to reading a weather vane pointing firmly against the wind: It may not dictate the storm itself, but it signals clearly which way conditions are likely to blow.
Underlying comments from survey respondents point to the same recurring themes: rising electricity costs, administrative burdens, competition from imports, weak service delivery at the municipal level, and sluggish structural reform. These are not new complaints, but their persistence underscores why confidence remains subdued. The South African experience is hardly unique in today’s fractured global order, where last year’s policy shifts and political changes in many countries have given way to a tougher, more uncertain reality.
The bottom line
For SA, the way forward is clear but not easy. Without addressing structural weaknesses (from logistics and electricity to municipal governance), the economy will struggle to move beyond its current low-growth path. While Operation Vulindlela (a joint initiative between the Presidency and the National Treasury, launched in October 2020 to fast-track structural reforms) holds promise, momentum needs to accelerate, and coordination across the public and private sectors must improve. Until then, the BCI remains stuck below the crucial 50 threshold, acting less like a springboard for growth and more like an anchor weighing on private investment. For investors and market participants, it is an important reminder that without confidence, capital sits on the sidelines.
Global harvests, local headaches: July’s food inflation uptick
Food inflation has re-emerged as the most persistent source of pressure for South African households. In July, annual food and non-alcoholic beverage inflation quickened to 5.7% YoY, from 5.1% in June. On the surface, this may look like a modest acceleration, but the underlying detail shows how entrenched and uneven the pressures have become across categories.
Meat prices continue to drive much of the increase. Beef costs climbed 10.5% YoY in July -the steepest pace since early 2025- as ongoing outbreaks of foot-and-mouth disease constrained supply. Poultry, traditionally the most affordable source of protein for lower-income households, rose by almost 20% YoY, underpinned by avian flu and elevated global prices. Even lamb, which tends to be a smaller part of local diets, faced record highs in global markets as tight supply from Oceania pushed prices upward. For many families, this has narrowed affordable protein choices to pork or processed meats, but even these alternatives are not immune to rising costs. The result is a visible “trading-down” effect, and in some cases, outright reductions in protein intake, a shift that carries long-term health and nutritional consequences.
Grains added another layer of concern in July. White maize (central to the South African diet, particularly for lower-income households) rose by 5.6% MoM. Yellow maize was more stable, but the overall picture reflects the lingering impact of the 2024 drought in the western production regions and strong import demand from neighbouring countries. While improved local and regional harvests have helped reduce the premium between white and yellow maize, late-season rains damaged quality, keeping top-grade white maize prices elevated. Wheat costs also edged higher in July despite global benchmarks softening and the rand trading stronger. This reflects SA’s structural reliance on imports, which still account for nearly half of domestic wheat consumption. For households, this means both maize meal and bread (the two most essential calorie sources across income groups) are becoming more expensive at the same time. Even small price increases here can have an outsized effect, especially for poorer households that already spend a large share of their income on food.
Fresh produce offered only patchy relief. Prices for potatoes and onions moved lower on the back of large harvests, but tomatoes and apples climbed as supply tightened. Carrots and lettuce remained significantly higher than a year ago, though they have eased off their early-2025 peaks. Dairy markets were equally mixed: while global prices edged lower for the first time in over a year, local producer prices rose as milk supply tightened. For consumers, this uneven pattern across categories makes it difficult to budget. A drop in the price of one staple is often cancelled out by a jump in another, leaving grocery bills unpredictable and volatile.
Global conditions continue to filter directly into local markets. The UN Food and Agriculture Organization’s (FAO) Global Food Price Index (FFPI) rose to 130.1 points in July, 1.6% higher than June and 7.6% above a year ago, with gains in meat and vegetable oils outweighing declines in cereals, dairy, and sugar. For SA, this divergence matters: while ample wheat supply in the Northern Hemisphere has helped cap global prices, maize markets remain under strain due to tight Argentine export availability, strong Brazilian domestic demand, and dry conditions in Eastern Europe and Ukraine. These global dynamics have amplified the domestic pressures already caused by drought, disease, and structural import dependence.
For domestic consumers, the implications are clear. Rising white maize prices directly push up the cost of maize meal — the cornerstone of lower-income household diets. Higher wheat costs feed into bread and baked goods, which are essential calorie sources across all income groups. Meanwhile, soaring beef and poultry prices mean that families are being forced to consume less protein or shift toward lower-quality substitutes. Although some fresh produce categories have softened, the volatility across dairy, fruit, and vegetables makes it difficult for households to plan or find lasting relief.
The bottom line
While global supply interventions and a stronger rand may offer some relief later in the year, structural vulnerabilities (from animal disease outbreaks to drought and transport costs) mean that food price pressures are unlikely to ease meaningfully in the near term. For many families, this translates into higher grocery bills, tougher choices at the checkout, and growing financial strain.
