South Africa is set to add rosé wine, snuff, and e-cigarette refills to its inflation measurement basket, while removing frozen potato chips and condensed milk to more accurately reflect the country’s changing consumer habits.
During a regular review, the national statistics agency has slightly reduced the proportion of housing within the goods basket used for calculating the consumer price index, lowering it from 24.5% to 24.1%. Despite this revision, housing remains the largest category, followed by food and non-alcoholic beverages, which saw its representation increase from 17.1% to 18.2%.
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The full Stats SA document can be accessed here.
As stated by Patrick Kelly, chief director of price statistics, there were no retroactive amendments to previously released consumer price index data due to this review.
“One of the primary purposes of this update is to improve the correlation between the CPI and national accounts, especially in relation to household final consumption expenditure,” he conveyed to reporters in Pretoria on Tuesday. “The rising trend of vaping as an alternative to cigarettes has warranted its inclusion.”
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This update will also reduce the number of items analyzed from 396 to 391, as well as reclassify five indexes and add one new index.
Additional Changes
- The transportation share has been decreased from 14.4% to 13.9% of the basket
- Fuel now constitutes 3.9%, down from 4.8%
The last major revision to the inflation basket occurred in 2022. These adjustments will take effect in the inflation report set for release on February 19, with December 2024 marking the new reference period. The inflation rate reported last month stood at 3%.
Additionally, the classification of several items will be altered. Various food products will be reassigned among categories, and insurance along with financial services will be consolidated into a dedicated category, holding a weight of 10.4%, moving from the miscellaneous goods and services index.
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This comprehensive revision is set to be announced following a meeting with the central bank this week, where it is expected to decrease the benchmark interest rate by a quarter percentage point to 7.5% as policy decisions are revealed on Thursday. Officials will consider their choices against a landscape of falling oil prices and a nearly 4% decline in the rand against the dollar since the last November meeting.
Analysts predict that inflation will remain beneath the central bank’s midpoint target of 4.5% at least until mid-2024.
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