Today’s post by Aidan Horn shows that the poor (decile 1) have typically experienced higher inflation than the wealthiest group in South Africa (decile 10). The poor also experience much more inflation volatility – almost 5 times more than the rich. This is because food is the major contributor to the inflation experienced by South Africa’s poorest, while rich people consume a more diverse set of goods and services, with housing and utilities
playing a larger role in driving their inflation outcomes, on average. This creates a communication challenge for the central bank, given differences in the inflation experienced by different households and firms.
