Each month economists carefully evaluate releases of consumer price indices. These both record what is happening to prices in the economy and influence decisions made on remuneration levels and interest rates.
In collecting the data necessary to calculate the consumer price index (CPI), Statistics SA staff obtain prices for products available for sale in retail stores by directly observing and recording these prices at the store where the sale takes place.
In the past, price information was collected through questionnaires completed by store managers or the head offices of retail chains. This new direct collection method has had a negligible impact on the trend or the level of the indices published. However, it does provide more control in situations where goods have been subjected to physical change, or discontinued and replaced by equivalent products.
All other elements required to compile the CPI, such as the basket of goods and services and their relative importance, have remained.
The introduction of this direct collection method for retail goods brings the CPI into line with the practice of most other countries. The new method provides greater opportunity to assure the quality of the price data used in the CPI.
Field workers can ensure that the prices reported are the same as the prices paid by consumers and that that the prices of the same items are being monitored each month.
Yesterday Stats SA announced that the official inflation rate (the percentage change in the CPI for the historical metropolitan areas this year compared with the same month last year) was 5 percent in July. This was 0.1 percentage points higher than the corresponding annual rate of 4.9 percent in June.
The rise in CPI for housing, which increased from 3.8 percent in June to 4.
The CPI rate for fuel and power, which increased from 0.9 percent in June to 6.6 percent in July.
Annual increases in the indices for food (1.7 percentage points) and transport (1.4 percentage points), remain key drivers of inflation on a year-on-year basis. Other drivers include housing (0.9 percentage points), medical care and health expenses (0.5 percentage points) and education (0.3 percentage points).
These increases were slightly counteracted by annual decreases in the price indices for clothing and footwear (minus 0.2 percentage points), furniture and equipment (minus 0.1 percentage points) and household operation (minus 0.1 percentage points).
The annual percentage change in the CPI, excluding interest rates on mortgage bonds (CPIX, which is the Reserve Bank's measure for inflation targeting), was 4.9 percent for July. This was 0.1 percentage points higher than the corresponding annual rate of 4.8 percent for June.
The increase in the CPIX for the historical metropolitan and other urban areas was mainly due to relatively large annual contributions in the price indices for food (1.8 percentage points), transport (1.2 percentage points), housing excluding interest rates on mortgage bonds (0.6 percentage points), medical care and health expenses (0.6 percentage points), education (0.4 percentage points), alcoholic beverages (0.2 percentage points) and fuel and power (0.2 percentage points).
These annual increases were slightly counteracted by annual decreases in the price indices for clothing and footwear (minus 0.2 percentage points), household operation (minus 0.1 percentage points), furniture and equipment (minus 0.1 percentage points) and communication (minus 0.1 percentage points).
Yesterday Stats SA also reported that the CPI for administered prices in July for the historical metropolitan areas compared with those in July last year rose 9.8 percent. This was 0.4 percentage points higher than the corresponding annual rate of 9.4 percent in June.
The annual increase in administered prices was mainly due to relatively large annual contributions in the price indices for petrol (7 percentage points), school fees (1 percentage point), electricity (0.9 percentage points), water tariffs (0.6 percentage points), tertiary fees (0.5 percentage points) and assessment rates (0.5 percentage points).
These annual increases were slightly counteracted by annual decreases in the price indices for telephone call rates (minus 0.4 percentage points), cellphone call rates (minus 0.2 percentage points) and public hospitals (minus 0.1 percentage points).
Stats SA also released the CPIX for administered prices in July, which came in at an annual increase of 8.9 percent. This was 0.5 percentage points higher than the corresponding annual rate of 8.4 percent in June.
Although economists and policy makers tend to focus on the official inflation rate and CPIX for the historical metropolitan areas, a number of related price indices are computed monthly. These include administered prices in metropolitan areas, as well as CPI, CPIX and administered price indices for rural areas, the total country and food.