South Africa’s consumer price inflation basket will change from 2009 with the weighting for food falling and transport increasing to reflect changes in spending patterns, Statistics South Africa said on Tuesday.
It said ”the total country” food weighting would drop to 18,28%, and 20,2% when including restaurants, from 26,6%. In the CPIX basket, food would be 17,86%.
The transport component would increase to 17,79% for the ”total country” compared with 12,98% and make up 21,42% of the CPIX basket.
The data agency said the new weights would be effective with the January 2009 consumer inflation release and were based on the 2005/2006 income and expenditure survey released in March.
The survey showed that transport was the fastest growing spending category for South African households, while expenditure on food had declined proportionately since 2000, largely due to increasing wealth.
”The new weights will definitely bias the CPIX downwards, we might see lower official inflation rates next year … it is an improvement and might better reflect the consumption patterns of households,” said Christelle Grobler, economist at the independent Bureau for Economic Research.
The central bank targets the CPIX basket and has a mandate to keep it between 3% and 6%, but it hit a five-and-a-half year high of 10,9% in May, mainly driven by fuel and food inflation, which surged to 17% year-on-year in May.
In response to growing price pressures the central bank has lifted its repo rate by 500 basis points to 12% since June 2006.
”The new weights see a shift from commodities to services. The share of services [was] 38,1%. In the new weights set, services will account for 43,7%,” Stats SA said.
It added the weighting for housing would decrease to 21,04% from 22,46%, and would calculate the rent equivalent rather than interest rates on mortage bonds ”because interest rates reflect the cost of debt, rather than the cost of housing.”
For the CPIX basket — which excludes mortage bond costs — housing would be 11,79%. – Reuters