Guiding consumers since 2009

Things are getting cheaper to make

By Staff Writer

There are two main components to measuring inflation. CPI which is the Consumer Price Index measures inflation by a basket of consumer goods. The second measure is PPI or the Producer Price Index which measures 'factory gate' inflation or how much more expensive it is to make things. Like consumer inflation is coming down so is producer inflation, and the latest stats show a whopping 4.1% decrease. This means it is now getting cheaper to make goods but the question remains will these savings be passed on to the consumer by the retailers.

 

  • PPI leads CPI
  • Food prices still high
  • Retailers might profit take

 

It has been a hard year for everybody and with the high inflation environment we experienced last year the knock on effects are only now filtering through into the shops. The drastic decline in PPI indicates that goods should get cheaper in the shops in the next few months as manufacturing costs rise less fast. However retailers are needing to make up lost revenues due to the downturn and may be tempted to profit take by not passing on these slower rising increases to the consumer. The competition commission is investigating the large supermarkets so they should pass the savings to consumers but smaller retailers may not.

Interest rates have been used to control inflation and the cuts that were made in the first half of this year are now starting to manifest in the economy. Inflation appears to be coming under control and is a fitting leaving present for The Guv Tito Mboweni. His successor may take a different view regarding inflation targeting but as long as real prices don't increase beyond what they should, then the economy will do better. The important thing is to plan your budget and don't expect prices to come down. They will rise, just hopefully not as quickly as they were. So plan your budget and stick to it, we are not out of the recession yet.

Recent Articles

Featured What’s the deal with underwriting?

When you apply for a long-term insurance policy, a financial adviser will ask some personal questions about your lifestyle, family history, health, and even ask you to take some medical tests. This process is called underwriting, but is it really necessary?

 

How are you taxed on your retrenchment package?

Unemployment is one of the biggest problems in South Africa. The emergence of the Covid-19 pandemic has exacerbated the situation with a lot of companies retrenching their employees.  When retrenched, you’ll receive a retrenchment package, but do you know how much tax you’re liable for?

Car repossessed – don’t be taken for a ride

When the country is facing an economic downturn, chances are your finances will feel the pinch. This can lead you to make bad financial decisions such as skipping your vehicle payments. But every decision has consequences and if you don’t pay your instalment, the bank will repossess your car. But what can you do when this happens?

 

Why you should consider gap cover

Your medical aid should protect you from incurring large medical bills when you’re sick. But what if your plan doesn’t cover the full cost of your medical expenses? We got in touch with insurance experts to find out whether gap cover is worth having.

Deals

Office furniture at discounted prices at BDK

Price: Available on request
When: Daily
Where: Johannesburg

Da Vincis Happy Hour Special

Price: Available on request
When: Daily
Where: Cape Town

Use your Absa card and get 30% cashback at Dis-chem

Price: Available on request
When: Daily
Where: Nationwide


Latest Guide

Guide to debt rehabilitation solutions