Economics

Administered Prices inflation

Consumer inflation caused by state-regulated prices such as water and electricity.

Headline Inflation

The unadjusted CPI inflation rate.

Inflation targeting

Forms part of monetary policy and is managed by the Reserve Bank to keep inflation within the range as set by the Minister of Finance. Target 3% Tolerance 2-4%

Deflation

Occurs when there is a sustained decrease in prices of goods and services over a period of time.

Demand-pull inflation

A situation where too much money chases too few goods.

Producer inflation

Sustained increases in the production costs of the producer over a period of time.

Hyperinflation

Price levels rise so rapidly that people lose confidence in the value of money and is often known as runaway inflation.

Producer Price Index

Measures the change in the price level of domestically produced goods and services when they leave their place of production as well as the prices of imported goods when they enter the country over a period of time.

Demand-pull inflation

Increase in household consumption, investors expenditure and export earnings cause this type of inflation.

Monetary policy measures

Open market transactions, moral suasion and increasing the interest rate form part of this policy when combating inflation.

South African Reserve Bank (SARB)

The institution which plays a key role in controlling inflation.

Consumer price index excluding mortgage costs (CPIX)

Calculates the inflation rate excluding the effect of mortgage bond costs (interest on mortgage bonds).

Core inflation

Excludes items from the CPI basket that are highly volatile or prices affected by government policy.

Consumer Price Index

An index that measures the price of a fixed basket of consumer goods and services and pertains to the cost of living.

Monetary Policy Committee

Meets on a regular basis to monitor inflation and to implement policy to combat inflation.

Stagflation

A period of high unemployment, high prices and low economic growth.

All-inclusive inflation

The implicit GDP deflator is strictly the ratio of the GDP at current prices to the GDP at constant prices for a specific year.

Administered prices

Prices controlled and managed by the government.

Fiscal policy measures

Increases in direct tax, indirect tax and tax on imported goods are measures of this policy to combat inflation.

Cost-push inflation

Occurs when there is an increase in the general price level caused by an increase in the cost of production.