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In this article we take a look at the curious case of Western Cape's persistently high levels of inflation. We recently mentioned in our Inflation Heat Map page that the Western Cape persistently seem to have the highest inflation rate of all provinces in South Africa. So how many months in a row are we talking about? And what is the financial impact of that on consumers staying in the Western Cape, compared to say those stay in Gauteng or KwaZulu-Natal? We take a more detailed look below.
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A hand full of bank notes
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Provincial inflation on interactive map
The interactive map below shows the monthly inflation rate in South Africa from the start of 2014. Users can select the month they are interested in and pause or resume the map animation at any time.
Readers will note that for the last couple of months, the Western Cape has shown the highest levels of inflation of any of the provinces in South Africa. So for just how many months has this been the case? Well the Western Cape has had the highest inflation rate of any of the provinces in South Africa for the last 16 months. So what is causing this? Is it where prices are collected in the Western Cape, is it the type of retailer prices are collected at, or is it due to what consumers in the Western Cape spend their money on? I.e is the weight of high inflation goods higher in the Western Cape than in other provinces?
Fresh pastries on display at a bakery.
So fine inflation is the Western Cape is higher than the other provinces in South Africa, and it has been for the last 16 months. So what? Doesn't really make a difference does it? Well yes it does. Lets look at the following example. Let's assume a basket of goods purchased during December 2016 = R30 000. So in December 2016 all households in all provinces spent R30 000 on goods and services they consume on a monthly basis. So how much would each province have to spend per month now (May 2018) to buy that same basket of goods and services that cost R30 000 in December 2016? The bar chart below answers that question.
As readers can see the Western Cape has to fork out R32 400 a month for the same basket that cost R30 000 in December 2016. In contrast the North West only has to pay R31 710 a month for that basket that cost them R30 000 in December 2016. So the average household in the Western Cape has to pay R690 a month more for their provinces typical basket of goods and services than those in the North West has to for their provinces' typical basket of goods and services consumed. Multiplying that by 12 to get an annual estimate, Western Cape households have to pay R8 280 per year more for their typical basket of goods and services than those in the North West. So yes while one might not think much of one province's inflation rate above another, it does have a significant financial impact on consumers ad households over time.