Consumer price index (South Africa)

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The consumer price index (CPI) is the official measure of inflation in South Africa. One variant, the consumer price index excluding mortgage costs (CPIX), is officially targeted by the South African Reserve Bank [1] and a primary measure that determines national interest rates.

Inflation increase in the general price level of goods and services in an economy over a period of time

In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index, usually the consumer price index, over time. The opposite of inflation is deflation.

South Africa Republic in the southernmost part of Africa

South Africa, officially the Republic of South Africa (RSA), is the southernmost country in Africa. It is bounded to the south by 2,798 kilometres (1,739 mi) of coastline of Southern Africa stretching along the South Atlantic and Indian Oceans; to the north by the neighbouring countries of Namibia, Botswana, and Zimbabwe; and to the east and northeast by Mozambique and Eswatini (Swaziland); and it surrounds the enclaved country of Lesotho. South Africa is the largest country in Southern Africa and the 25th-largest country in the world by land area and, with over 57 million people, is the world's 24th-most populous nation. It is the southernmost country on the mainland of the Old World or the Eastern Hemisphere. About 80 percent of South Africans are of Sub-Saharan African ancestry, divided among a variety of ethnic groups speaking different African languages, nine of which have official status. The remaining population consists of Africa's largest communities of European (White), Asian (Indian), and multiracial (Coloured) ancestry.

South African Reserve Bank central bank

The South African Reserve Bank (SARB) is the central bank of South Africa. It was established in 1921 after Parliament passed an act, the "Currency and Bank Act of 10 August 1920", as a direct result of the abnormal monetary and financial conditions which World War I had brought. The SARB was only the fourth central bank established outside the United Kingdom and Europe, the others being the United States, Japan and Java. The earliest suggestions for the establishment of the Central Bank in South Africa date back to 1879. A select committee, consisting of ten members of Parliament was established on 31 March 1920 to examine the benefits to the national interest of the establishing of the central bank.

Contents

Measured variants

In total there are six measured variants of CPI based on data drawn from two different geographic sets: metropolitan areas only and both metropolitan and other urban areas. The Core and Food indexes are compiled across both geographic sets. The All Items index is compiled only for metropolitan areas. CPI minus mortgage costs (CPIX) is compiled only for both metropolitan and urban areas. [2]

All items index

The All Items index encompasses 12 categories of consumer expenses:

Core index

The Core index excludes five price sets considered to be particularly volatile. These are:

Food index

The Food index is derived by excluding everything but food from the CPI basket of goods and services. The food section of the basket includes eight food categories plus non-alcoholic beverages and a miscellaneous category for condiments and spices. [3]

CPIX

CPIX is measured by excluding one section of the CPI basket of goods and services, the owner's equivalent rent, from the calculation. [3]

January 2009 changes

In January 2009 Statistics South Africa changed the naming and composition of headline CPI measures, effectively replacing CPIX as the measure for government inflation targeting. The weighting of items in the basket was also changed, with certain items excluded and new items introduced, and a broader range of prices are collected for individual items. Data for the revamped index had been collected since January 2008 in order to provide immediate historic comparisons after the change. However, as many legal agreements refer to the previous baseline measures, these continue to be published. [4] [5]

See also

Notes

  1. ↑ SA Reserve Bank Monetary Policy Review
  2. 1 2 Statistics South Africa
  3. 1 2 3 Statistics South Africa(2)
  4. ↑ Statistics South Africa(3)
  5. ↑ Statistics South Africa(4)

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References

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