Guiding consumers since 2009

Inflation outlook brightens

By Staff Writer

The South African economy appears to be pulling itself out of the problematic inflation environment that we have been struggling under recently. The effects of inflation targeting seem to be paying dividends finally. Consumer inflation is almost within the Reserve Bank's target range of 3 - 6 percent and Producer Price Inflation (PPI) is contracting. PPI is the measure of how quick making things gets more expensive and at the moment things are actually getting cheaper to make.

 

  • Producer Price Inflation is at -3.7%
  • Electricity production more expensive by +1.6%
  • Petrol and coal products down 2.2%

 

Inflation starts with the raw materials. These are then manufactured. PPI is a measure of the costs of manufacturing, an inflation at the factory gates measure. The products are then sold to retailers who then sell them onto the consumer. Now according to the figures it is getting cheaper to make most products and there is actually deflation at the factory gates. In theory these savings should then be passed onto the retailers who would in turn pass them onto you the consumer.

In reality the retailers do not always pass these savings onto you the consumer. Consumer inflation is sitting at 6.1% meaning prices are going up by 6.1% but the cost of producing those goods is going down at 3.7%. While there is a time lag between when the raw materials for a product are processed into the finished goods which are available in the shops there should have been more downward pressure on consumer inflation. The PPI figures are positive but whether consumers will see the benefit is a debatable point. Plan your budget on consumer rather than producer inflation.

Recent Articles

Featured The bank took money from my account – is this allowed?

You’ve just deposited money into your account and suddenly you see a notification from your bank. Money has been deducted from your account to pay the outstanding debt that you have with the bank. Is this allowed?

How much does it cost to draft a will?

Having a Will allows you to determine who inherits your property when you die. If you die intestate, the government will determine how to distribute your assets. Many people die intestate because they don’t know how to draft a will or are intimidated by the costs of drafting one.

Is your home correctly priced for the current market?

The property market is typically in either one of two phases, a buyers’ market or a sellers’ market. According to real estate experts, we are currently in a buyer’s market. For this reason, it is important as a seller to correctly price your house to ensure interested buyers and a valuable sale in the end.

Fuel rewards programme – how to fill up on petrol and points

South Africa’s volatile economy has often meant that factors like the fuel price bear the brunt. This year alone the country’s fuel price has fluctuated by between R1.50 to almost R3, which has put increasing pressure on motorists. That said, many of the bigger South African brands have provided some relief by way of fuel rewards programmes.

Deals

Mowana Voucher Special

Price: From R1,099
When: Before 24 December 2019
Where: Johannesburg

Birchwood Hotel Christmas Gift

Price: R959
When: Between 15 December 2019 to 1 January 2020
Where: Johannesburg

Burger & Lobster Lunch in 30 Minutes Special

Price: R99
When: Mondays
Where: Cape Town