The inflation crisis of 2008 drew greater attention to the varying experiences of inflation
in South Africa and, in particular, to the fact that different groups within society may
have significantly differing inflation experiences. The groups may be defined according
to income level, but may also be categorised according to demographic, labour market
and other characteristics.
The first aim of this research is to investigate differences in the inflation rates
experienced by different types of households. Instead of using income/expenditure to
group households, various labour market and household structure characteristics are
used. The groups analysed include grant recipient households, unskilled worker
households, unionised worker households and households with children. Significant
differences between the group-specific and all urban inflation rates may suggest the
need for using group-specific price indices in applications where the purchasing power
of these households is to be preserved.
Secondly, the paper investigates the extent to which the all urban inflation rate is
representative of individual households, using household-specific inflation rates. The
paper analyses the distribution of household-specific inflation rates relative to the all
urban inflation rate, as well as the relationship between the level of the overall inflation
rate and the dispersion of household-level inflation rates