S. Africa Cuts Weight of Food, Increases Gasoline in CPI
South Africa reduced the weightings of food and transport costs, while increasing those for education and electricity in its consumer inflation index to better reflect current spending in the economy.
The index will include prices of 393 goods from January, less than the 402 in the current basket, Patrick Kelly, executive manager of price statistics at the data agency, said in Johannesburg today. CPI will also be rebased to 2012 prices from 2008, he said.
The government is seeking to update how it calculates consumer price increases more frequently to take into account changes in spending patterns in Africa’s biggest economy. Reweighting the basket will happen every three years starting in 2003. The last adjustment was in 2009 and the change was previously done every five years.
Food and non-alcoholic beverages will probably represent 17.5 percent of goods in the total-country basket, down from 18.3 percent previously, Kelly said. The weighting is based on March consumer inflation data and will be updated again in December, he said.
The food weighting in CPI for urban areas, which the agency publishes as headline inflation, declines to 14.8 percent from 15.7 percent and rises to 24.1 percent for housing from 22.6 percent, Kelly said.
Inflation accelerated to 5.5 percent in September from 5 percent a month earlier, remaining within the central bank’s 3 percent to 6 percent target for a fifth month, Statistics South Africa said Oct. 24. Higher food and fuel prices, and a weaker rand, are risks to the inflation outlook, according to Reserve Bank Governor Gill Marcus. The statistics agency didn’t say how the changes announced today will affect inflation.
Eskom Holdings SOC Ltd., the state-owned electricity company, is seeking to raise prices by an average 16 percent annually for five years, it said Oct. 22. The cost of gasoline has climbed 14 percent this year, according to Department of Energy data.
Gasoline, which forms part of the transport sub-index, will make up 4.68 percent of total-country CPI using the March inflation calculation compared with 3.61 percent previously, while electricity will rise to 3.55 percent from 2.18 percent, the agency said. For urban areas, the gasoline weighting increases to 4.9 percent from 3.93 percent and to 3.56 percent for electricity from 1.87 percent, it said.
The rand pared gains after the changes were announced, strengthening 0.3 percent to 8.6902 against the dollar at 3:50 p.m. in Johannesburg. Yields on the government’s 6.75 percent bonds due March 2021 fell one basis points, or 0.01 percentage point, to 6.66 percent.
The new weights are calculated using data collected in the income and expenditure survey conducted in the 12 months through August 2011. The statistics agency will also publish an index that will remove volatile items by throwing out goods that show the largest and smallest price changes in a month.
The new basket will add feta cheese, bread rolls, bricks, vodka, cement and tablet computers, the statistics agency said. It will remove savory biscuits, frozen vegetables, dried lentils and peas, and vienna sausages, the agency said.
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