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WITS/PPS Media release: Getting inflation under control?

The latest bi-annual results of the inflation survey undertaken by the Professional Provident Society (PPS) and the School for Economic and Business Sciences (SEBS) among South African professionals show an expectation of lower future inflation.

“The survey results show low confidence in the accuracy of past rates of inflation and these perceptions feed into expectations of future inflation,” says Professor Jannie Rossouw, Head of SEBS.  “However, in the most recent survey this linkage is weaker than in previous surveys.”

These are the main findings of the ninth comprehensive South African inflation survey among PPS members.

Respondents were asked to respond to two questions:

1. Whether they believe that historic inflation reflected accurately the price increases in South Africa; and 
2. To state their expectations of future inflation.

In this survey 75 per cent of respondents indicated that they perceived actual price increases to be higher than the official rate of inflation (Figure 1).  This is significantly lower than before, when 86 per cent of respondents reported a perception of price increases above the rate of inflation.  This confirms a decline in the rate of price increases experienced by South African consumers.

Figure 1

Figure 2

“These responses raise hopes of South Africa at long last getting its persistent inflation problem under control,” says Rossouw.  “However, the danger remains that the recent credit risk downgrade suffered by South Africa can easily upset this positive development, with concomitant higher inflation owing to a decline in the exchange rate of the rand”.

Lower inflation will alleviate some pressure for higher domestic interest rates.  Lower inflation will also alleviate pressure on household budgets.

“The latest survey results are the product continued collaborating between PPS and SEBS at the University of the Witwatersrand,” says Gerhard Joubert, Executive: Group Marketing & Stakeholder Relations.  “PPS includes the survey questions in its quarterly survey among South African professionals and will continue to do so in future.  Collaboration between PPS and SEBS started in 2014.  It has grown this year, with PPS sponsoring the WINIR Conference in commemoration of Prof Ludwig Lachmann, hosted by SEBS from 11 to 13 April 2017.”

The bi-annual survey is distributed electronically among PPS members and forms part of a broader survey on perceptions and impressions undertaken by PPS. The survey is completed electronically by PPS members and is therefore free from any enumerator bias of influence.

The latest survey questions were distributed on PPS members on 29 March 2017 and received 5 990 responses.