Food Inflation in South Africa: Some Implications for Economic Policy

Abstract

This paper analyses the trends in food price movements in South Africa between 1980 and 2008. There are three main results emanating from the analysis in this paper. Firstly, food price movements have played a large role in generating inflationary episodes in South Africa. Secondly, while external influences do matter, South African food price movements are mainly due to domestic influences. This implies that national policy has an important role to play in taming domestic food price inflation. Thirdly, given the strong second round impacts, food price movements warrant special attention in monetary policymaking. Core measures of inflation that exclude food price movements may not accurately reflect the underlying inflationary pressures in the economy and could compromise the attainment of the goal of price stability. JEL Classification: E310, E320, E370

Measuring Core Inflation inSouthAfrica

“…The trimmed mean estimates would appear to provide similar results, although the trimmed mean absolute value hardly manages to outperform the forecasts that use aggregated inflation data, while at longer horizons, the errors from the asymmetric trimmed mean estimate are equivalent to those of the dynamic factor model. Once again, the measure that excludes food and energy prices performs particularly poorly, supporting the findings of Rangasamy ().…”

“…The recent literature on measures of core inflation for South Africa includes the work of Blignaut et al (2009), Rangasamy (2009) and Ruch and Bester (2013). The first of these derives an asymmetric trimmed means estimate, which seeks to provide an estimate of core inflation that is similar to that of the Hodrick-Prescott filtered trend.…”

“…Such a measure would be attractive, as in contrast with the Hodrick-Prescott filter, the trimmed means estimate would not be subject to an endpoint problem when estimated in real time. In addition, Rangasamy (2009) estimates the persistence in each of the subcategories of the data with a univariate time-varying parameter model, such that larger weights are allocated to those subcategories that exhibit greater persistence (where the weights may be attributed to the degree of persistence, or a combination of persistence and the original basket weight). The results in this paper suggest that these measures track headline inflation with relatively high precision and may provide reasonable estimates of future inflationary pressure.…”

Analisis Perilaku Inflasi 33 Propinsi Di Indonesia

“…Hasil penelitian Rangasamy (2010) memberikan hasil bahwa pergerakan harga pangan memegang peranan penting dalam pembentukan inflasi di South Africa. Menguatkankan hasil penelitian Rangasamy (2010), penelitian Adam (2012) memberikan hasil bahwa inflasi umum yang terjadi di Tanzania, 60 persen disumbang oleh harga pangan dan harga minyak dunia. Dalam melihat pengaruh harga pangan terhadap inflasi, penelitian sebelumnya melihat dari sumbangan harga pangan terhadap total inflasi.…”

“…Sehingga kenaikan harga beras akan menyebabkan kenaikan harga-harga barang lain atau akan menyebabkan kenaikan inflasi. Hasil penelitian ini menguatkan hasil penelitian dari Rangasamy (2010) dan Christoper (2012) yang memberikan hasil bahwa harga pangan mempunyai pengaruh yang kuat dan sumbangan yang besar pada tingkat inflasi.…”