True cost of inflation

[Salmank]

Hi,

What is the true cost of inflation?

I ask because last year fuel was around R13 a liter, this year it's already over R17.

Last year I bought my douglasdale milk from PNP at R23 for the 2 liters bottle. It's now R28

Last year we could easily get 2 liter Cokes on special for R13.99. This year we hardly get it on special.

So, if I had R100 000 last year, the buying power surely dropped more than 7%? And that R100 000 really has last value than R93 000 this year? So how much exactly is inflation? Or rather, how much increase in salary a person should get every year to have the same buying power?

 

[Milano]

The inflation rate seldomly seems to match reality.

 

[cr@zydude]

The inflation rate seldomly seems to match reality.

Depends on your consumption habits.

CPI is based on the average urban consumer. And the avergae South African doesn't buy Douglasdale milk, gluten free bread or imported Cherry Coke.

 

[rietrot]

The inflation rate seldomly seems to match reality.

It will if you buy the same basket of goods. This isn't a difficult problem, people can easily make and track their own basket.

 

[GoB]

In 2008 petrol was R14, so that is only a 2% annual increase.
Dairy has gone up but the milk I buy was already R30 last year.
I bought 2l Zip Zero for R11 just the other day.

Just playing devil's advocate.

Overall the biggest impacts to me: Non-inflation-adjusted income tax; 500% increase in water bills.

 

[newby_investor]

Some prices haven't gone up at all, and some have even gone down. Property prices are stagnant, for example. Fibre internet hasn't changed since last year. Some things have gone up far more than inflation. Your milk example is probably due to droughts which we're not quite over yet, and fuel is a combination of international oil prices and the ZAR/USD exchange rate.

 

[NarrowBandFtw]

fuel is a combination of international oil prices and the ZAR/USD exchange rate.

No it is not, at least it is not JUST that and factoring in levies still does not explain the price movements:
https://mybroadband.co.za/forum/thr...-over-the-past-10-years.963377/#post-21768637

 

[newby_investor]

No it is not, at least it is not JUST that and factoring in levies still does not explain the price movements:
https://mybroadband.co.za/forum/thr...-over-the-past-10-years.963377/#post-21768637

Fair enough, it's a complex thing, the AA obviously knows how it works because they're pretty good at calling the increase / decrease before the government formally announces it, so it can't be completely secret. But the oil price and the exchange rate are the two major factors if you want to predict whether or not it's going up or down next month, or if you want to compare it to a few months ago.

 

[MirageF1]

I would say CPI+- 3%, probably around 8-10% year on year for the last few year.s....

Petrol, food, rentals, R weakness all major contributors.

 

[Sapphiron]

I always look at the milk price, it always seems to mirror the inflation on my grocery bill.

Milk is one of those goods that requires nearly all of the key input costs and market factors
- Fuel cost (transport)
- energy (pasteurization)
- exchange rate (imported technology)
- high skill labour (technology)
- low skill labour (lifestock)
- highly regulated food safety

 

[konfab]

I always look at the milk price, it always seems to mirror the inflation on my grocery bill.

Milk is one of those goods that requires nearly all of the key input costs and market factors
- Fuel cost (transport)
- energy (pasteurization)
- exchange rate (imported technology)
- high skill labour (technology)
- low skill labour (lifestock)
- highly regulated food safety

I don't think it reflects things that affect people like healthcare and insurance.

I don't think you would see the effects of the NHI and crime problems of this country much on the milk price.

 

[inanabhay]

Inflation is what the government tells the reserve bank it must be

 

[Visser]

The measurement for inflation is totally wrong and out of touch with reality, as they only measure a basket of very specific things that would often suite propaganda and lies. The fact is, inflation is running away with us and it is reflecting in pricing of everything that is not included in the basket.

 

[Sapphiron]

I don't think it reflects things that affect people like healthcare and insurance.

I don't think you would see the effects of the NHI and crime problems of this country much on the milk price.

It is true. There is no one magic thing you can use. I think many South African's would love to worry about inflation on their health bill.

I think milk is an only good as an average grocery item, not a "full basket".

I think the only way to look at real inflation is to make up a significantly larger basket. like 300 items

 

[inanabhay]

Even then, the quality of the basket is not the same.

How do you compare the loaf of bread of today to that of 20 years ago - impossible to compare

Its best to look at different "baskets" - like a basic food basket - to determine the impact on the poorest people in ZA

 

[Speedster]

Inflation is what the government tells the reserve bank it must be

Actually, inflation is calculated by StatsSA.

The measurement for inflation is totally wrong and out of touch with reality, as they only measure a basket of very specific things that would often suite propaganda and lies. The fact is, inflation is running away with us and it is reflecting in pricing of everything that is not included in the basket.

We do love ourselves a conspiracy theory... The exact basket used is published by StatsSA. I'd love to know what goods / services you consider to not be represented, or over-represented in the basket. See here for some help to get you started: http://www.statssa.gov.za/?p=9450 and http://www.statssa.gov.za/publications/P01415/P014152016.pdf

 

[rietrot]

Inflation is what the government tells the reserve bank it must be

Not really. They can control it retrospectively with the interest rate, making money cheaper or more expensive.

 

[supersunbird]

In 2008 petrol was R14, so that is only a 2% annual increase.
Dairy has gone up but the milk I buy was already R30 last year.
I bought 2l Zip Zero for R11 just the other day.

Just playing devil's advocate.

Overall the biggest impacts to me: Non-inflation-adjusted income tax; 500% increase in water bills.

Fake news, it was R10 something and then crashed.

 

[SilverNodashi]

government don't care much for inflation when they want to raise prices on something, especially if it impacts them directly.