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Food Inflation In South Africa: Some Implications For Economic Policy

  • LOGAN RANGASAMY

The paper identifies some macroeconomic and policy implications arising from food inflation in South Africa. There are three main results emanating from the analysis in this paper. Firstly, food price movements have played a large role in generating inflationary episodes in South Africa. Secondly, while external influences do matter, South African food price movements are mainly due to domestic influences. This implies that national policy has an important role to play in taming domestic food price inflation. Thirdly, given the strong second-round impacts, food price movements warrant special attention in monetary policymaking. Core measures of inflation that exclude food price movements may not accurately reflect the underlying inflationary pressures in the economy and could compromise the attainment of the goal of price stability.

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Article provided by Economic Society of South Africa in its journal South African Journal of Economics.

Volume (Year): 79 (2011)
Issue (Month): 2 (06)
Pages: 184-201

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Handle: RePEc:bla:sajeco:v:79:y:2011:i:2:p:184-201
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