INFLATION
Building blocks of CPI tap into our evolving lifestyles
The January inflation figure is based on a new updated product basket and weights. Patrick Kelly explores what this means.
Statistics SA has announced that the inflation rate for January was 6.6% — a drop from 6.8% in December. The January figure is the first of a new four-year consumer price index (CPI) series based on an updated product basket and weights. These changes not only determine the measurement of inflation but provide insight into the changing spending patterns of South African households. The CPI basket is the list of products for which prices are surveyed and which are used for calculating the index. In order for the CPI properly to measure the inflation experience of households, these goods and services must reflect the purchases of consumers as closely as possible. Of course, it is not possible for the CPI to mirror each individual’s purchases. Rather, the weights and basket are designed to represent the total expenditure of all households, based primarily on a detailed expenditure survey. The timing of this update is well within the five-year limit set out in international standards an...
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