The share of Consumer Price Index (CPI) 8-digit items growing above the mid-point inflation target of 4.5% are still at post 2009 lows, both when considering the number of detailed CPI components at 8 digit level or the combined weight in the index of such items. 8-Digit CPI includes consumer price indices at category grouping such as a ‘loaf of white bread’. The chart by Oliver Guest shows that the decline in inflation has been broad-based, since the profile of the unweighted and weighted individual components of the consumer basket are similar.
Given the recent unilateral shift to a 3 percent inflation preference by SARB’s Monetary Policy Committee, it is worth looking at the proportion of CPI items growing at faster than 3 percent. We find that the proportion of goods and services rising at more than 3 percent has historically included more than 60 percent of the price categories published by Statistics South Africa (or more than two thirds of the basket if one considers the weights of these items).
As we have argued previously, there is a lot of uncertainty around the measurement of underlying inflation, as Codera’s core inflation measure, CPI-Common, has suggested more broad-based inflation pressures than those indicated by Statistics SA’s core inflation measure and its trimmed mean measure.
