OWN CORRESPONDENT, Cape Town | Monday
THE first quarter 2001 inflation expectation survey by the Bureau for Economic Research (BER) had revealed a decline in inflation expectations, the bureau said on Friday. The bureau said the most recent decline in inflation expectations was significant, as inflation expectations could easily have risen.
Although CPIX inflation increased from 6.9% during 1999 to 7.7% during 2000, respondents lowered their expectations.
Similarly, the latest results indicated that the rise in transport and fuel costs during 2000 and the fall in the rand exchange rate did not push up inflation expectations.
The BER said one could only state that inflation expectations declined structurally if inflation expectations remained at current lower levels or declined further during subsequent quarters.
The bureau said during the quarter of 2001, financial analysts, business executives and trade union officials lowered their inflation expectations significantly compared to the fourth quarter of 2000.
These groups now expected headline CPI inflation to average 6.3% during 2001 compared to the 7.2% expected previously.
“In particular business executives and trade union officials lowered their expectations,” BER said.
“In the case of business executives, their inflation expectations dropped from 7.2% to 6.3% while trade union officials lowered their expectations from 8.1% to 6.5%.”
The BER said household inflation expectations remained unchanged compared to the fourth quarter.
They said the SA Reserve Bank commissioned them to conduct quarterly surveys amongst households, business executives, financial analysts and the trade union movement to measure inflation expectations.
The BER said the management of inflation expectations was an important component of the SARB’s inflation targeting monetary policy framework. “The monetary policy committee (MPC) takes these survey results into account when deciding on monetary policy,” the BER said.
The results of the most recent survey were processed on February 26 in the case of the analysts, business people and trade union representatives and on January 11 in the case of households.
The next inflation expectation survey will be conducted during May 2001 and the results will be released in mid-June 2001.