What is Inflation?

Inflation is the way in which goods and services become more expensive, over a period of time.
Inflation

Inflation is usually expressed as a yearly rate.

The rate of inflation is the percentage of money you’ll need more every year, to buy the same things you were able to buy the previous year. It’s the percentage by which the value of money decreases per year.
Inflation rate

Measures of Inflation

The consumer price index, or CPI, is the cost of a ‘shopping basket’ of goods and services of a typical South African household.
CPI

The CPI inflation rate is calculated by comparing the CPI for the current month, with the CPI of the corresponding month of the previous year. The percentage by which the CPI basket of services and goods increased, is the CPI inflation rate.

CPI is the official measure of inflation that is used in South Africa.

The CPI minus mortgage costs, or CPIX, is a derivative of the CPI. The CPIX basket of goods and services contains all of those that occur in the CPI’s basket of goods, except for mortgage interest rates and only metropolitan and other urban areas are taken into consideration.
CPIX

The CPIX inflation rate is the measure of inflation that is used by the South African Reserve Bank (SARB), when making monetary policy decisions for inflation targeting.

The producer price index, or PPI, is the cost of a ‘shopping basket’ of goods of a typical South African producer of commodities.
PPI

Where the CPI and CPIX is used to measure the inflation experienced by households, the PPI is used to measure the inflation of prices that are experienced by the producers of commodities.

The PPI measures changes in prices in the early stages of production, before those price changes have had a chance to filter through to households. Because of this, the PPI is a useful tool to predict changes in the prices of consumer goods and services (which effect CPI and CPIX) in advance.

The PPI inflation rate is thus seen as an early indicator for coming changes in the CPI and CPIX inflation rates.

This definition is part of the Dictionary of Financial Terms. If you want to receive a notice every time a new definition is published, you can subscribe to Liberta.

,

 

~ i may be wrong ~ report evil adverts ~
  1. TYRON

    Please can i have the daily /weekly CPI AND PPI emailed to my email above please.

    Many thanks

  2. Francois Viljoen

    Hi Tyron

    The CPI and PPI statistics are calculated monthly, and the statistics are updated on this site as soon as they are available.

    To get the latest CPI and PPI inflation rates, you can visit this website once a month. Detailed CPI and PPI pages are here:

    CPI inflation rate

    PPI inflation rate

    Regards,
    Francois

  3. Mpumi

    Hi, I just want to know, what would be the correct interest rate to use when giving staff an increase. My company has used 5.1% which I think is not correct as it’s only for the month of March and I think they cant use one months inflation rate rather the yearly rate. Please assist with this year’s inflation rate.

  4. Francois Viljoen

    @Mpumi

    The inflation rate you’re referring to is the year-on-year CPI inflation rate for March 2010, which was 5.1%.

    The important thing to realize here is that this figure is a “year-on-year” figure, and not just for the month of March.

    A year-on-year inflation rate of 5.1% for March 2010 means that over the year, from March 2009, to March 2010, products and services that make up the CPI basket of goods increased by 5.1%.

    If your company’s policy was to give a CPI inflation based increase, then that’s exactly what they’ve done.

  5. Munya

    Hi, i have been looking around on how to calculate unanticipated inflation in S.A without much success. Could you please shed some light on the calculation of unanticipated inflation.

  6. Francois Viljoen

    @Munya

    As I understand it the difficulty with unanticipated inflation is the fact that it cannot be anticipated, i.e. there is no way to calculate it.

  7. Francois Viljoen

    @Munya

    Scratch that – unanticipated inflation would be the difference between anticipated inflation (i.e. what was forecasted) and the actual inflation.

    To calculate unanticipated inflation you would have to go back and see what the inflation forecasts by some authority were, say a year ago, and what the actual inflation is today.

    The difference between the two would be the unanticipated inflation.

  8. Lulu

    Hi.

    I have been utilising the CPIX rates for adjusting master rates for specific use to calculate mine closure quantums. The use of the CPIX has been discontinued however, can one utilise CPI (excluding owners’ equivalent rent). If I have the CPIX rates calculated from 2002 – 2008 can I calculate the new rates for 2009 utilising the CPI (excluding owners’ equivalent rent). Ideally one should compare apples with apples.
    Thanks

  9. Brent

    Hi

    How would I go about determining how to transform an amount from 1996 into the 2010 equivalent, to take into account the inflation that has occured in this period?

  10. Suzelle Collins

    Please could you help me with the official Inflation Rate for 2006, 2007, 2008, 2009, 2010 and 2011. , for the calculation of child maintenance.

    THANK you

  11. Clemnce Muchingami

    Please could you help me with the official Inflation Rate for 2006, 2007, 2008, 2009, 2010 and 2011. , for valutions purpose.

  12. Reg Swarts

    The way I understand it inflation is calculated based on the weighting of items in a basket. Would it be possible to calculate (set up a calculator based on the basket) of an APPROXIMATE personal inflation rate ? Not everyone is effected by items in the basket so it suggests to me that personal inflation could differ from the official rate. Or have I lost it ?

  13. Francois Viljoen

    @Reg Swarts

    You understand it 100% and yes it is possible.

    The most accurate way to calculate your personal inflation rate is by recording all your expenses and comparing the cost of buying the same things at a point, to what it was exactly a year before.

  14. Reg Swarts

    This Website is really good, however I cannot find the components of the inflation basket plus it’s weightings ! If it is there please supply a link !
    I have calculated my personal inflation rate as previously suggested and as I had most of the information available. It is however based on certain assumptions like food prices being lumped together and so forth but it is alarmingly more than the official rate.

  15. Francois Viljoen

    @Reg Swarts

    If you don’t mind sharing – how much did your personal inflation rate turn out to be?

    You can look on page 5 of this document to see the weightings used to calculate the CPI.

  16. Reg Swarts

    The rate I calculated came to 14,9%. I am retired so basically my basket is food, transport, municipal and other services, medicaL aid ect. Interest payable does not feature as I am debt free. The items that seem to cause the acceleration is food, electricity and medical aid.
    Scary is the word that comes to mind ! Seems like the race is on between money and the grave because the pension fund will not grow consistently above that rate !
    Thanks for the information.

  17. Francois Viljoen

    @Reg Swarts

    Very interesting. Thanks for the feedback.

  18. Jabu

    Please tell me the four useful approaches to the diagnosis of inflation in South Africa

  19. Magdel

    can you please advise the value of the amount of R100 000 in March 2009 to end October 2010. where can i do the calculation?

    regards

  20. Ghulamullah Hashmi

    any body who can illustrate the difference between anticipated and unanticipated inflation, and who one of them more bad for the nations economy???

  21. Elvis M

    Good Viljoen;

    We have requested for the following service from suppliers:

    = Supply and delivery of health care risk waste boxes, sharps containers, liners and tapes at number of clinics, as well as the safe collection, removal, Transportation, treatment and/ or disposal of health care risk waste therefrom on a monthly basis.

    The following is the quote we received for three years:

    R13.29 per kg on year one (start 5 Jan 2012)
    R14.35 per kg on year two (start 5 jan 2013)
    R14.95 per kg on year three (start 5 jan 2014 to 4 jan 2015)

    How do i verify if the pricing is in line with the inflation rates
    CPI, CPX

    Regards;
    Elvis M
    elvism123@webmail.co.za
    elvisma@joburg.org.za

  22. Marie Benadie

    Hi
    I found this website very useful.
    I am a 45 year old Bcom. Risk Management (first Year) student and Economics is one of the subject I really struggle with.
    This is the first formal studies I undertake since writing matric in 1986 and I didn’t have Economics at school!!! So you understand my predicament.
    This website made me understand the concepts of inflation much beter. It is actually written in a language that I as a dummy in Economics can understand.
    Thank you

  23. zee

    very informative site

  24. Pieter

    Please assist me to determain the CPI index percentage for the 2016 financial year.

    I need to pay a monthly payment plus the CPI Index from March 2016 to February 2017.

    I need to know what % of CPI i need to add to the amount .

    Please assist

    Thank You

    Pieter

Add a Comment