Guiding consumers since 2009

How much will inflation fall?

By Staff Writer
Get cheap personal loans online with Justmoney

How much will inflation go down by?

The new inflation data will be released by Statistics SA on Wednesday.

There has been a change to the basket of goods that is used to measure inflation.

The new basket should have the effect of lowering the inflation rate. It has also been redesigned to better separate mortgages out, the list of changes and why can be found on the Statistics SA website.

The Mail and Guardian came in with a speculative piece about how much various economists expected the inflation rate to drop by.

The rate is expected to drop not only because of the changes to the basket used to work it out but also the fact that the upward inflationary spiral that has been a round for some time now, appeared to have turned the trend and to have started heading consistently down, late last year.

The article took a look at the various scenarios that could play out. They based their research on a Reuter's poll that came out last Friday. The poll suggested that of the 19 economists interviewed a consensus on CPIX of 10.4% was reached.

This would be the lowest level that inflation has been at since April 2008.

Some economists saw it dropping further and faster with the possibility of inflation being within the 3%-6% band already by May. It was a policy of inflation targeting that caused all of the interest rate hikes, when inflation was out of that band for so long.

The new headline CPI inflation figure weights food as a lesser portion of the basket now, which should have a major effect as food is a big driver of inflation.

The article then looked at predictions of a rate cut coming and some were even expecting a full 100 basis point cut.

Business Day looked at the rising costs of fruit and veg and how food inflation is soaring. They noted that retail giant Pick n Pay was stepping in and insisting that price cuts be passed on to the consumer.

This sentiment was further followed up in another article by Business Day. The long cycle of interest rate hikes has changed, the markets are suffering and instead of growth in many areas we shall see contraction.

The good news though is that with inflation going down we should see a bit more spending money in our pockets.

It takes time for these effects to be felt in the economy and as in the case of Pick n Pay who understand consumer price sensitivity, they know that the cuts need to be passed down to consumers rather than to a round of profit taking.

However not all retailers will pass on price decreases to your pocket, so until such time as the economy stabilises again, the best thing to do is to hold on tight, keep your budget rolling and set up a savings account as a buffer against anything unexpected happening. 

Recent Articles

Featured New homeowner? Be aware of these extra expenses

You’ve overcome all the hurdles of buying a home. You’ve managed to pay your deposit and your closing payments, and now you’re a proud title deed holder. However, there are other expenses waiting around the corner. Are you prepared?

Your biggest credit conundrums – answered

Understanding your credit health is one of the most important factors in managing your finances. This is because it gives you insight into your debt, your borrowing ability, and your financial history. While many understand this, there are still many questions on how to do just that.

Avoid debt collectors, choose debt counselling

There are two things you can do when you are struggling to pay your debt. You can either let your creditors hand your debt over to debt collectors – or you can let debt counsellors help you deal with your debt.

Retail notes: easy investment option for new investors

Being a newbie in the world of investing can be challenging because you don’t know where and how to invest. With so many investment options, you could easily be befuddled. Justmoney looks at how retail notes can help you cut your teeth in the world of investing.   

Deals

Translux Student Discount

Price: Depends on destination
When: Daily
Where: Nationwide

Zimbali Senior Citizens Discount

Price: From R1342.00
When: Until 14 December 2019
Where: KwaZulu Natal

Free meal for kids at Mozambik Restaurant

Price: Free
When: Until 15 November 2019
Where: Johannesburg, Durban, Pretoria