Each month, Statistics South Africa publishes a number of price indices, including the consumer price index (CPI) and producer price index.
The CPI includes a number of indicators, covering headline inflation, inflation in rural areas and food inflation. These all carry the status of official statistics.
In addition to the indices being published, Stats SA has for some time been preparing to release a monthly consumer price index for administered prices. The results have been published monthly as a discussion document, released at the same time as the official monthly statistics.
There are different views on how to define the concept of administered prices, and which goods and services should be included in the basket that constitutes administered prices.
Yesterday the discussion paper on administered prices for February was published, and provided considerable detail on one of the approaches being considered. This regards administered prices as a broad concept, consisting of two components: those prices that are regulated and those that are not regulated.
On this approach, an administered price can be defined as the price of a product that is set consciously by an individual producer or group of producers and/or any price that can be determined or influenced by the state, either directly or through any government agency or institution, without reference to market forces.
Regulated prices, which are a subset of administered prices, are monitored and controlled by government policy. Price regulation does not necessarily imply the presence of an economic regulator, but there is a restriction on the extent to which prices may vary, depending on the government's policy objective.
The basket of goods and services where prices are administered includes areas such as housing, fuel and power, medical care, communication, education and transport.
These can, in turn, be broken down into a basket of administered prices that are regulated, such as the price of petrol, and a basket of goods and services that are not regulated, such as the price of public transport and motor licences.
The weights of each of these goods or services denote the relevant importance of the indicator product. The weight of a product is calculated by dividing the total expenditure by households on that product by the total expenditure on all goods and services by households.
The total weight for the basket of administered prices in the CPI for the whole country is significant (17.23 percent). The individual product that is the highest weight of the administered prices is petrol (4.29 percent for the CPI and 4.72 percent for CPIX).
The discussion paper on administered prices for February indicates that the annual percentage change in administered prices is higher than the overall percentage change in CPI.
For the period February 2004 to February 2005, the increase in CPI for administered prices is 5.7 percent for the whole country; for the historical metropolitan areas, it is 6 percent. By comparison, the overall CPI for the historical metropolitan areas increased by 2.6 percent.
The development of an official index for administered prices will be an important addition to the suite of price indicators, and is likely to be completed soon. Pali Lehohla is South Africa's statistician-general and head of Statistics SA. For more information on Stats SA and its statistical outputs, including the latest discussion paper on administered prices, visit www.statssa.gov.