Rose Wine and Vaporizers Added to South Africa’s Updated Inflation Basket

South Africa will be incorporating rosé wine, snuff, and e-cigarette refills into its inflation measurement basket while eliminating frozen potato chips and condensed milk in order to better mirror the country’s rapidly evolving shopping trends.

The country’s statistics agency, during a routine review, has decreased the representation of housing in the goods basket used for calculating the consumer price index from 24.5% to 24.1%. Despite this adjustment, it continues to be the largest category, succeeded by food and non-alcoholic beverages, which saw an increase in weight from 17.1% to 18.2%.

You can access the complete Stats SA document here.

According to Patrick Kelly, chief director of price statistics, there were no changes made to previously issued consumer price index data as a result of this review.

“A key aim of this update is to enhance the alignment between the CPI and national accounts, specifically within the household final consumption expenditure component,” he remarked to journalists on Tuesday in Pretoria. “The popularity of vaping has risen significantly over the years as a cigarette alternative, hence its inclusion.”

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This update will also reduce the number of items surveyed from 396 to 391, along with the reclassification of five indexes and the inclusion of one new index.

Additional Modifications

• The share of transport has been reduced to 13.9% from 14.4% of the basket
• Fuel now accounts for 3.9%, down from 4.8%

The last significant alteration to the inflation basket occurred in 2022. These updates will be effective in the inflation report scheduled for release on February 19, with December 2024 being the new reference period. The inflation rate reported last month was 3%.

Additionally, the categorization of various items will also be modified. Certain food products will be rearranged among groups, and insurance along with financial services will be placed into a distinct category, having a weight of 10.4%, migrating from the miscellaneous goods and services index.

This overhaul will be implemented after a meeting with the central bank this week, which is anticipated to lower the benchmark interest rate by a quarter percentage point to 7.5% as it announces its policy decisions on Thursday. Officials will evaluate their decisions against a backdrop of decreasing oil prices and a roughly 4% decline in the rand against the dollar since the last meeting in November.

Analysts project that inflation will remain below the central bank’s 4.5% target midpoint until at least mid-year.

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