As with most of the world, South Africa’s inflation rate has been falling for a number of years. This becomes incredibly clear when you see it visually:
Yet, globally bond yields are lifting, yield curves are pushing out, soft and hard commodities are rallying & energy prices are rising. All the indications are that inflation is starting to appear. (Indeed, I am sure most of you feel that your spending power is no longer going as far as it used to too. All hallmarks of inflation.)
Yet, our South African CPI is only reported at 3.2% (January 2021).
Ignore this stat. CPI has its own flaws in both its calculation and the weighting and selection of goods and services it uses.
Rather, glance at our listed retail and consumer stocks and see the inflation rates they are reporting across their sales:
|Company||Period||Majority of Products||Selling Price Inflation (%)|
|Truworths||26 weeks ended 27 Dec 2020||Clothing||0,0%|
|Woolworths (Clothing)||26 weeks ended 27 Dec 2020||Clothing||2,4%|
|Clicks||21 weeks ended 24 Jan 2021||Health products||3,0%|
|Rhodes Foods (Regional Fresh)||Sep 2020 – Feb 2021||Food products||3,2%|
|Pick ‘n Pay||March – Aug 2020||Groceries||3,4%|
|Dis-Checm||22 weeks ended 2 Feb 2021||Health products||3,6%|
|Mr Price||13 weeks ended 26 Dec 2020||Clothing||3,8%|
|Shoprite||June – Dec 2020||Groceries||4,3%|
|Cashbuild||June – Dec 2020||Building materials||4,5%|
|Massmart||9 months ended Sep 2020||Groceries||4,5%|
|Woolworths (Food)||26 weeks ended 27 Dec 2020||Groceries||4,8%|
|Pepkor||October – Dec 2020||General||5,0%|
|Spar||18 weeks ended 18 Jan 2021||Groceries||5,1%|
|Itatile||June – Dec 2020||Building materials||6,0%|
|Libstar||October – Dec 2020||Food products||8,1%|
|Tiger Brands||October – Dec 2020||Food products||9,0%|
|Rhodes Foods (Long Life)||Sep 2020 – Feb 2021||Food products||10,0%|
This short selection of public companies is far from representative of the economy. Also, each company is different, has differing input costs and offers different retail baskets to different consumers. Also, these companies are reporting inflationary stats across different time periods.
In other words, this is not very representative nor comparable and, at best, only anecdotal.
Yes, despite being anecdotal, it does paint a persuasive picture that the average inflation out there in the real world is markedly higher than the 3.2% CPI. And, if anything, it is rising (see how the more recent the update from a listed stock, the higher its typical inflation rate, particularly if it is retailing food).
Let’s show the above table visually:
While I lay out the endless caveats in this working, it does highlight that domestic inflation certainly has (pockets) that are way above reported CPI. Ignore this at your own peril.