Embed Size (px)
DESCRIPTION
Comments: Comments: A South African Perspective A South African Perspective May 2009May 2009 • South Africa has an inflation-targeting monetary policy framework. The continuous inflation target range for the year-on-year increase in the headline CPI (CPI for all urban areas) is 3 to 6 per cent. Introduction …Introduction Introduction … … 13,6% Aug 8,5% March 10 12 0 2 6 8 4 0 2 6 8 4 Targeted inflation* and food inflationTargeted inflation* and food inflation 14,9% March
Citation preview
Comments: A South African Perspective
Comments: Comments: A South African PerspectiveA South African Perspective
May 2009May 2009
Introduction …Introduction Introduction ……
• South Africa has an inflation-targeting monetary policy framework. The continuous inflation target range for the year-on-year increase in the headline CPI (CPI for all urban areas) is 3 to 6 per cent.
• In 2007-08, policy had to deal with the continuing pass-through of inflation pressures from a succession of international food and energy price shocks, developments in domestic electricity prices, and from the foreign-exchange rate of the rand
Consumer price inflation: Targeted inflation*Consumer price inflation: Targeted inflation*
8,5% March
13,6% Aug
Inflation targets and outcomes as at March 2008Inflation targets and outcomes as at March 2008
0
2
4
6
8
10
12
Australia
Brazil
Canada
Chile
Colom
bia
Czech R
ep.
Hungary
Iceland
Indonesia
Israel
Korea
Mexico
New
Zealand
Norw
ay
Peru
Philippines
Poland
Rom
ania
South Africa
Sweden
Thailand
Turkey
UK
Per c
ent a
nd p
erce
ntag
e po
ints
0
2
4
6
8
10
12
Inflation target range or tolerance limit Inflation as at March 2008
Targeted inflation* and food inflationTargeted inflation* and food inflation
14,9% March
The effect of food, petrol and electricity priceson CPIX inflation
The effect of food, petrol and electricity priceson CPIX inflation
Weights, sticky prices and parity pricing …Weights, sticky prices and parity pricing Weights, sticky prices and parity pricing ……
• Going beyond the macro perspective
The CPI and the weighting of food
Stage of processing
Import and export parity pricing
Comparison of the category weights of the inflation target measures
Comparison of the category weights of the inflation target measures
Per cent
CPIX CPI(metropolitan and (all urban
other urban areas) areas)
Food and non-alcoholic beverages 26,92 15,68Alcoholic beverages and tobacco 3,05 5,58Clothing and footwear 4,06 4,11Housing and utilities 15,55 22,56Household contents, equipmentand maintenance 8,37 5,86Health 6,13 1,47Transport 15,01 18,80Communication 3,19 3,22Recreation and culture 3,79 4,19Education 3,77 2,19Restaurants and hotels - 2,78Miscellaneous 10,16 13,56
Source: Statistics South Africa
Comparison of the category weights in the headline CPI inflation measure
Comparison of the category weights in the headline CPI inflation measure
Per cent
Expenditure Group
Total Very low Low Middle High Very high
Food and NAB 15,68 39,96 35,80 32,84 24,95 10,25Food 14,27 37,45 33,25 30,45 22,93 9,17
Source: Statistics South Africa
Food prices in the PPI and CPIFood prices in the PPI and CPI
Parity pricing: Maize pricesParity pricing: Maize prices
Concluding comments … responsesConcluding comments Concluding comments …… responsesresponses
• Monetary policy: Flexible inflation targeting and exogenous shocks
• Other: Integrated Food Security Strategy (IFSS); National Treasury (2002); Competition Commission (2002); Food Pricing Monitoring Committee
Headline and food inflation in selected countriesHeadline and food inflation in selected countriesPer cent
Country 2004 2005 2006 2007China: Headline 3,9 1,8 1,5 4,8
Food (33,6) 10,0 2,9 2,3 12,4Euro area: Headline 2,2 2,2 2,2 2,1
Food* (15,6) 1,0 0,7 2,3 2,7Hungary: Headline 6,7 3,6 3,9 8,0
Food (20,7) 11,6 11,6 11,5 11,5Indonesia: Headline 3,5 2,1 13,1 6,5
Food (42,3) 11,0 11,2 11,6 11,4Japan: Headline 0,0 -0,3 0,3 0,1
Food (27,3) 0,9 -0,9 0,5 0,3New Zealand: Headline 2,3 3,0 3,4 2,4
Food (17,4) 0,8 1,4 3,0 3,9South Africa: Headline 1,4 3,4 4,7 7,1
Food** (21,0) 2,3 2,2 7,2 10,3Tanzania: Headline 4,9 4,4 6,2 7,0
Food (55,9) 5,9 5,9 8,0 7,0United Kingdom: Headline 1,3 2,0 2,3 2,3
Food (9,0) 0,7 1,5 2,5 4,5United States: Headline 2,7 3,4 3,2 2,8
Food (13,9) 3,4 2,5 2,4 4,0Venezuela: Headline 21,7 16,0 13,7 18,7
Food* 25,0 25,1 25,6 26,0Note: Weight of food prices in CPI in brackets* Food and non-alcoholic beverages** Food excluding soft drinksSources: Bloomberg and national statistical agencies
Contributions to CPI inflationContributions to CPI inflationContributions to CPI inflation
Percentage change over twelve months* and percentage points
2009Jan Feb Mar
Total* 8,1 8,6 8,5Of which:Food and NAB 2,4 2,4 2,3Alcoholic beverages and tobacco 0,6 0,6 0,6Housing and utilities 2,1 2,0 1,8Health 0,1 0,1 0,2Transport 0,0 0,3 0,2Education 0,2 0,2 0,2Miscellaneous goods and services 1,4 1,6 1,6Other 1,3 1,4 1,6
* NAB: Non-alcoholic beverages Source: Statistics South Africa
The effect of food, petrol and electricity prices on headline inflation
The effect of food, petrol and electricity prices on headline inflation
Percentage change over twelve months
2009Jan Feb Mar
Headline CPI 8,1 8,6 8,5CPI excluding petrol prices 9,1 9,5 9,5CPI excluding food and NAB*prices 6,6 7,4 7,5CPI excluding food, NAB andpetrol prices 7,8 8,2 8,6CPI excluding food, NAB, petroland energy prices 7,3 7,8 8,0
* NAB: Non-alcoholic beverage
Source: Statistics South Africa
