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Construction of CPIX Data for Forecasting and Modelling in South Africa

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  • Janine Aron

    (Centre for the Study of African Economies)

  • John Muellbauer

    (Nuffield College, University of Oxford)

Abstract

South Africa adopted inflation targeting in 2000, targeting the consumer price index (CPI) excluding mortgage interest cost (or CPIX), for “metropolitan and urban areas”. Yet there is no clear technical account of the methodology of construction of CPI and CPIX by Statistics South Africa, as published by reputable government statistical agencies in other countries. This paper has two goals. First, we aim to enhance transparency by explaining the CPI methodology (as we understand it), and to encourage publication of an official technical handbook. We also raise various technical issues concerning CPI construction. Second, we produce estimates of CPIX “metropolitan areas”) back to 1970, on a consistent methodology, using monthly price indices, the appropriate weights, and linking correctly when rebasing. While the CPIX (“metropolitan and urban areas”) measure only became relevant to monetary policy setting and wage contracts from 2000, and is published monthly only from 1997, a far longer time series is required for the forecasting and modelling exercises of the South African Reserve Bank (SARB), National Treasury and others. Our measure differs in some years from that published by Statistics South Africa (published monthly only back to 1994).

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File URL: http://128.118.178.162/eps/dev/papers/0409/0409056.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Development and Comp Systems with number 0409056.

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Length: 28 pages
Date of creation: 28 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwpdc:0409056

Note: Type of Document - pdf; pages: 28
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Web page: http://128.118.178.162

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References

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  1. Aron, Janine & Muellbauer, John, 2002. "Interest Rate Effects on Output: Evidence from a GDP Forecasting Model for South Africa," CEPR Discussion Papers 3595, C.E.P.R. Discussion Papers.
  2. Robert J. Gordon, 2000. "The Boskin Commission Report and its Aftermath," NBER Working Papers 7759, National Bureau of Economic Research, Inc.
  3. Janine Aron & John Muellbauer & Coen Pretorius, 2004. "A Framework for Forecasting the Components of the Consumer Price Index: application to South Africa," Economics Series Working Papers WPS/2004-07, University of Oxford, Department of Economics.
  4. Janine Aron & John Muellbauer & Coen Pretorius, 2004. "A Framework for Forecasting the Components of the Consumer Price," Development and Comp Systems 0409054, EconWPA.
  5. Ashok Bhundia, 2002. "An Empirical Investigation of Exchange Rate Pass-Through in South Africa," IMF Working Papers 02/165, International Monetary Fund.
  6. Gordon, Robert J., 1990. "The Measurement of Durable Goods Prices," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226304557.
  7. Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1, May.
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Citations

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Cited by:
  1. Janine Aron & John Muellbauer & Benjamin W. Smit, 2004. "A Structural Model of the Inflation Process in South Africa," Economics Series Working Papers WPS/2004-08, University of Oxford, Department of Economics.
  2. Janine Aron & John Muellbauer & Coen Pretorius, 2004. "A Framework for Forecasting the Components of the Consumer Price," Development and Comp Systems 0409054, EconWPA.
  3. Janine Aron & John Muellbauer, 2008. "Multi-sector inflation forecasting - quarterly models for South Africa," Economics Series Working Papers WPS/2008-27, University of Oxford, Department of Economics.
  4. Aron, Janine & Muellbauer, John, 2010. "Does aggregating forecasts by CPI component improve inflation forecast accuracy in South Africa?," CEPR Discussion Papers 7895, C.E.P.R. Discussion Papers.
  5. Janine Aron & John Muellbauer, 2009. "Some Issues in Modeling and Forecasting Inflation in South Africa," CSAE Working Paper Series 2009-01, Centre for the Study of African Economies, University of Oxford.
  6. Aron, Janine & Muellbauer, John, 2006. "Review of Monetary Policy in South Africa: 1994-2004," CEPR Discussion Papers 5831, C.E.P.R. Discussion Papers.
  7. Aron, Janine & Muellbauer, John, 2012. "Improving forecasting in an emerging economy, South Africa: Changing trends, long run restrictions and disaggregation," International Journal of Forecasting, Elsevier, vol. 28(2), pages 456-476.
  8. Janine Aron & John Muellbauer, 2006. "Review of Monetary Policy in South Africa since 1994," CSAE Working Paper Series 2006-07, Centre for the Study of African Economies, University of Oxford.

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