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In this article we take a look at the inflation rate of the poor, middle class and rich in South Africa. The inflation rates are based on the expenditure deciles as published by Statistics South Africa.
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Inflation of the poor, middle class and rich
The chart below shows the year on year inflation rate of three different deciles as published by Statitics South Africa:
Decile 1: Poorest 10% of households
Decile 5: Mid point
Decline 10: Richest 10% of households
Deciles as published by Statistics South Africa measures households in groups of 10% intervals. Where decile 1 is the poorest 10% of households, based and calculated on their expenditure. Decile 5 is the 10% of households lying between 40% and 50%. And decile 10 is the 10% richest households in South Africa based on their expenditure.
Decile 1: Poorest 10% of households
Decile 5: Mid point
Decline 10: Richest 10% of households
Deciles as published by Statistics South Africa measures households in groups of 10% intervals. Where decile 1 is the poorest 10% of households, based and calculated on their expenditure. Decile 5 is the 10% of households lying between 40% and 50%. And decile 10 is the 10% richest households in South Africa based on their expenditure.
What is immediately apparent is the fact that the green line, the line showing the inflation rate of the rich, is far less volatile than that of the middle class (dashed line) and the poor. Another observation to make is the fact that the blue line (the inflation of the poor) and the dashed line tends to move in a similar fashion.
For the bulk of the months in this analysis the inflation rate of the poor and the middle class tend to be higher than the inflation rate of the rich. The summary below shows the average year on year inflation rate from January 2009 to January 2019:
Focussing on the last year, the poorest 10% of households had the better of the inflation numbers:
But even with the last year favouring the poor and middle class, over the course of the last 10 years they have been affected the most by inflation. Lets say all three groups were given a theoretical R1000 to buy goods that they would normally buy in January 2009. How much money would they need in January 2019 to buy that same set of goods:
The example above shows how inflation eats into people's buying power and it shows how it eats even more into the poor and middle class than the rich. So its a case of the poor getting poorer, and the rich getting richer. While inflation affects everyone the impact is less on the rich than on the poor leading to even greater inequality in South Africa's society.
For the bulk of the months in this analysis the inflation rate of the poor and the middle class tend to be higher than the inflation rate of the rich. The summary below shows the average year on year inflation rate from January 2009 to January 2019:
- Decile 1: 5.7%
- Decile 5: 5.6%
- Decile 10: 5.4%
Focussing on the last year, the poorest 10% of households had the better of the inflation numbers:
- Decile 1: 2.4%
- Decile 5: 3.4%
- Decile 10: 4.8%
But even with the last year favouring the poor and middle class, over the course of the last 10 years they have been affected the most by inflation. Lets say all three groups were given a theoretical R1000 to buy goods that they would normally buy in January 2009. How much money would they need in January 2019 to buy that same set of goods:
- Decile 1: R1 647
- Decile 5: R1 633
- Decile 10: R1 605
The example above shows how inflation eats into people's buying power and it shows how it eats even more into the poor and middle class than the rich. So its a case of the poor getting poorer, and the rich getting richer. While inflation affects everyone the impact is less on the rich than on the poor leading to even greater inequality in South Africa's society.