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.
February 14th, 2010 at 11:56 am
Please can i have the daily /weekly CPI AND PPI emailed to my email above please.
Many thanks
February 15th, 2010 at 09:55 am
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
June 1st, 2010 at 08:52 am
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.
June 1st, 2010 at 09:38 am
@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.
June 8th, 2010 at 11:25 pm
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.
June 10th, 2010 at 01:33 pm
@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.
June 10th, 2010 at 01:09 pm
@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.