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A Comparison of Inflation Expectations and Inflation Credibility in South Africa: Results from Survey Data

Author

Listed:
  • Jannie Rossouw
  • Vishnu Padayachee
  • Adél Bosch

Abstract

This paper reports a comparison of South African household inflation expectations and inflation credibility surveys undertaken in 2006 and 2008. The objective is to test for possible feed-through between inflating credibility and inflation expectations. It supplements similar earlier research that focused only on the 2006 survey results. The single most important difference between the survey results of 2006 and 2008 is that female and male respondents reported inflation expectations at the same level in 2006, while female respondents expected higher inflation than male respondents in the 2008 inflation expectations survey. More periodic survey data will be required for developing final conclusions on the possibility of feed-through effects. A very large percentage of respondents in the inflation credibility surveys indicate that they 'don't know' whether the historic rate of inflation is an accurate indication of price increases. It will be necessary to reconsider the structure of credibility surveys to increase the number of respondents providing views on the accuracy of historic inflation data.

Suggested Citation

  • Jannie Rossouw & Vishnu Padayachee & Adél Bosch, 2010. "A Comparison of Inflation Expectations and Inflation Credibility in South Africa: Results from Survey Data," Working Papers 173, Economic Research Southern Africa.
  • Handle: RePEc:rza:wpaper:173
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    File URL: http://www.econrsa.org/node/196
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    Keywords

    Inflation; inflation credibility; inflation expecttaions; inflation surveys; multinomial analysis;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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