The recent reweighting of CPI in South Africa and release of 8-digit CPI data, which includes grouping such as a ‘loaf of white bread’ (available on EconData), created an opportunity to expand the cross-section of consumer price items covered by our CPI-Common measure of underlying inflation. Our measure suggests that there has been more broad-based inflation pressure since 2019 than implied by the exclusion-based core inflation measure.
As we discussed in our paper on the optimal inflation target for South Africa, a forthcoming paper by Hendri van Zyl shows that a similar approach based on 8-digit CPI components produces more accurate short and long-term projections of inflation than other measures of underlying inflation (such as core), making it a useful measure of underlying inflation.
