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In today's blog we take a look at the inflation rate for the first two three months of 2018 in South Africa on a Rose graph, which helps to highlight the main contributors to South Africa's inflation rate.
Current Inflation Rate (March 2018): 3.8% Just which product categories makes up the biggest part of South Africa's overall inflation rate? While some products might experience extremely rates of inflation, their relative importance (weight) might be small, and therefore its overall impact in inflation therefore be insignificant. The rose graph below shows the relative contribution of the main product groups in the Consumer Price Index (CPI) basket. |
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Monthly inflation for 2018 on rose wheel graph
The interactive graphic below shows main contributors to monthly (Year on year inflation rate) in South Africa. In March 2018, the inflation was 3.8% down from 4.0% in Febraury 2018. The rose wheel shows the main contributors to the inflation rate for each month. But please note the residual (due to rounding in the CPI) is not displayed in this graphic and due to this the sum of the main contributors might not add up to the inflation rate of the month in question.
The graphic above shows that housing, largely due to its significant weight makes up a big part of the overall monthly CPI. Other significant contributors to the monthly CPI is Transport, Food and Alcoholic Beverages and miscellaneous goods and services (in this grouping the majority of it is made up by various types of insurance such as building, household content, vehicle and medical insurance such as medical aid).
The below provides a summary of the main groups contributions to the CPI: (March 2018)
Food and non alcoholic beverages: 0.6
Alcoholic beverages and tobacco: 0.3
Clothing and footwear: 0.1
Housing and utilities: 1.1
Household contents and services: 0.1
Transport: 0.4
Education: 0.2
Restaurants and hotels: 0.1
Miscellaneous goods and services: 1.0
Residual: -0.2
All Items (Headline inflation): 3,8
With the current inflation rate sitting well withing the South African Reserve Bank (SARB) inflation target range of between 3% and 6% one wonders if the SARB Monetary Policy Committee (MPC) was not a little soft when deciding on interest rates at their last meeting by cutting rates by a mere 25basis points. The current level of inflation looks to be benign and well within the target range, that one feels a stronger cut could have been provided to assist struggling South African consumers and ailing South African economy.
The below provides a summary of the main groups contributions to the CPI: (March 2018)
Food and non alcoholic beverages: 0.6
Alcoholic beverages and tobacco: 0.3
Clothing and footwear: 0.1
Housing and utilities: 1.1
Household contents and services: 0.1
Transport: 0.4
Education: 0.2
Restaurants and hotels: 0.1
Miscellaneous goods and services: 1.0
Residual: -0.2
All Items (Headline inflation): 3,8
With the current inflation rate sitting well withing the South African Reserve Bank (SARB) inflation target range of between 3% and 6% one wonders if the SARB Monetary Policy Committee (MPC) was not a little soft when deciding on interest rates at their last meeting by cutting rates by a mere 25basis points. The current level of inflation looks to be benign and well within the target range, that one feels a stronger cut could have been provided to assist struggling South African consumers and ailing South African economy.
The bar chart below shows the trend in South Africa's inflation rate over the last 6months. It is clear that the risk to the upside for inflation is minimal in the short term considering the current inflation rate and the target set by the South African Reserve Bank (SARB)
The bar chart above shows the declining trend in South Africa's inflation rate. And one might expect this declining trend to be halted somewhat with the increase in all sort of taxes such as fuel levy, "sin taxes", VAT etc as announced by former finance minister Malusi Gigaba in his budget speech in February 2018.
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