Stats SA reshuffles the inflation basket: What’s in and what’s out?
Stats SA announced on Tuesday that it has shaken up the basket of goods and services used to measure consumer inflation.
The products in the basket are updated periodically to better reflect shifts and trends in consumer spending. Product weights are also adjusted.
The facelift includes adding 71 new products, removing 53 products and reorganising 29 products (through merging, splitting or reclassification).
In total, there are now 391 products in the basket, down from 396.
New food products that were added to the basket include basmati rice, meat bones, meat patties, chicken nuggets and ready-made meals.
Items that were removed include ready-mix flour, flavoured milk, frozen potato chips and ground coffee/coffee beans.
The new basket expands the coverage of education-related items.
In the clothing category, Stats SA said it would now price a range of school uniform items.
School transport services and after school centres are also included.
“It will now also be possible to track education inflation separately for private and public schools and universities,” StatsSA said.
Crechés and stationery items remain.
“Load shedding may have influenced the changes in the basket, leading to the inclusion of gas in cylinders and candles. Municipal services are expanded to include refuse collection and sewage removal. Household items that were removed include the humble toaster/sandwich maker, household batteries and wax shoe polish,” StatsSA said.
Several products and services have been added to the health basket, including clinic services, orthopaedic surgeons, optometrists, spectacles, physiotherapists, inpatient (long-term) care centres and pathology services.
The basket no longer has public-sector health services, such as public-sector general practitioners (GPs) and public-sector specialists.
The rise in e-hailing services ensured its inclusion as a new item, StatsSA further said.
School transport services, mentioned earlier, are also added to the transport category. Driving licences and post office box rentals no longer make the cut.
New technology products have been included.
Streaming services, modems and routers, USB and external hard drives, power banks and charging cables will now be tracked by the consumer price index (CPI).
Landline telephone fees and satellite TV decoders are no longer part of the basket.
“Today is International LEGO Day, making it the perfect opportunity to highlight the inclusion of toy building bricks in the recreation category. However, several products were dropped. Teddy bears, for example, are sadly no longer with us. Digital cameras, musical instruments, television licences and magazines were also removed,” StatsSA said.
The following items were added in the personal care and miscellaneous services category: body wash, earrings, after school centres, membership fees for professional associations and trade unions, and hiring of equipment for events.
Personal care products that were removed include toothbrushes, tissues, hair relaxer, hair colour, and non-electrical shavers.
The structure of the new basket is based on data from the 2022/23 Income and Expenditure Survey (IES) and point-of-sale records from retail chain stores. A complete list of products entering and exiting the basket is included below
Readjustment of the weights
“Each product in the CPI basket has a weight attached to it that determines its relative importance when calculating the headline inflation rate. A product’s weight represents its contribution to total household expenditure, expressed as a percentage. A larger weight has more impact on the determination of the headline rate,” StatsSA said.
The IES survey is the most important data source for calculating the weights.
The Household Final Consumption Expenditure component of the national accounts and a variety of other supplementary data sources – such as point-of-sale records from retail chain stores and regulatory data – are also used.
Stats SA last updated the weights in 2022, using data from 2019. The weights will now be based on data for 2023.
The highest weight category in the CPI is housing and utilities.
This includes municipal services, levies for sectional title complexes, actual rent paid by tenants and owners’ equivalent rent.
The new weight is 24,1%, slightly down from 24,5% in the 2019 weights.
The share for actual rentals increases to 4,4% from 3,5%, while owners’ equivalent rent drops to 11,2% from 13,0%. Electricity charges decrease to 3,4% from 3,6%.
The weight for food and non-alcoholic beverages increases to 18,2% from 17,1%. This means that South Africans are spending proportionally more on food products than they did in 2019. Cereal products, which include staples such as maize meal and bread, increase to 4,1% from 3,2%. The weight for meat decreases slightly to 5,1% from 5,4%.
Transport declines to 13,9% from 14,4%. The biggest reason for this decline is a reduction in the weight for fuel that shrank to 3,9% from 4,8%. However, the weight for passenger transport services increases to 2,9% from 2,1%. Despite the overall decline, the transport category has the third-highest weight in the basket.
Consumers in South Africa are spending proportionally more on telecommunications services, which include cellphone data and calls, and internet services. The weight for the information and communication category increases to 5,5% from 3,9%.
Insurance decreases to 8,4% from 9,9%. The decline is largely due to a softer weight for health insurance (medical aid).
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