Inflation perceptions and inflation expectation in South Africa: trends, determinants and comparisons (2006–2010)

Abstract

This paper reports the results of a multinomial analysis of inflation perceptions and inflation expectations in South Africa. Inflation perceptions surveys among South African individuals have been undertaken since 2006. The introduction of these surveys followed on domestic inflation expectation surveys conducted in 2000, and the use of inflation perceptions surveys internationally. Domestic inflation perceptions surveys among individuals are a private initiative undertaken biennially, while domestic inflation expectation surveys among individuals are funded by the South African Reserve Bank and are undertaken quarterly. By comparing the results of domestic inflation perceptions surveys and inflation expectation surveys undertaken since 2006, this paper establishes common characteristics that impact on the formulation of inflation perceptions and inflation expectations. It supplements earlier research that focused only on the results of the 2006 and 2008 perceptions survey results. With the completion of the third biennial inflation perceptions survey in 2010, more data sets are available for the purposes of comparison. Furthermore, the questions on inflation perceptions were expanded in the third survey. Although this provides for a broader basis of analysis between inflation perceptions surveys and inflation expectation surveys, further periodic inflation perceptions survey data will be required to test whether current inflation figures determine and anchor inflation expectations.

Key words: inflation, inflation perceptions, inflation expectations, inflation perceptions, inflation surveys, multinomial analysis