Today’s post by Jurgens Fourie estimates the oil price pass-through to inflation in South Africa. Codera’s model controls, amongst other things, for the exchange rate and global inflation pressures. Our estimates suggest that over the long term, headline inflation rises by 0.3 percentage points in response to a 10% increase in the US dollar price of oil. While this may appear to be low, it is in line with the Reserve Bank of South Africa’s estimate, and only marginally lower than Morgan Stanley’s estimate. Our estimate is also similar to the US Federal Reserve’s estimate for the US.
