OPINION AQUILA COLUMN
Some people argue that the official inflation rate in South Africa is far too low. They believe that when you look at a basic household budget, which includes rental, rates and taxes, electricity, water, grocery items, fuel costs, clothing, and other similar monthly expenses, the inflation rate is far higher.
What is the reality? Is the South African inflation rate so broad that it can be 6% or thereabouts? Does it include so many things that the weighting for everyday living gets lost in the quantum of everything else?
It’s also argued that the inflation rate is deliberately reported low for wage negotiations ,iInternational markets and foreign capital flows. This seems a bit of a far stretch.
So what are the fundamentals that determine the inflation rate in South Africa? It is undoubtedly an important political figure because it indicates how well the economy is performing in the country. It also is impacted by government services such as electricity and the fuel price, to name only two.
Economists and similar experts ? would argue that the inflation rate in South Africa is calculated using a basket of goods that reflects average household spending, adjusted periodically. Key drivers include fuel costs, food prices, and administered prices like electricity tariffs. These factors are market-driven, not politically controlled.
While some may feel inflation is underreported, the figure represents a national average, not individual experiences. Stats SA, an independent body, compiles the data using internationally recognized methods. External audits, including by the IMF and World Bank, confirm its accuracy, with no signs of manipulation.
In short, it appears that ?South Africa’s inflation is shaped by economic realities rather than political interference. But the impact of inflation of course is experienced at an individual level? where erosion of spending power is most felt .?
