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.