The CPI is a current social and economic indicator constructed to measure changes over time in the general level of prices of consumer goods and services that households acquire, use, or pay for. The index measures changes in consumer prices over time by measuring the cost of purchasing a fixed basket of consumer goods and services of constant quality and similar characteristics. The products in the basket are selected to be representative of households' expenditure during a specific year. Such an index is called a fixed-basket price index. Changes in the index reflect the effects of price changes on the cost of achieving a constant standard of living.
The South African CPI has three equally important objectives:
- To measure inflation in the economy so that macroeconomic policy is based on comprehensive and up-to-date price information.
- To measure changes in the cost of living of South African households to promote equity in measures taken to adjust wages, grants, service agreements and contracts.
- To provide a deflator for consumer expenditure in the national accounts and other economic data, to compute volume (as opposed to nominal) estimates.
In compiling the South African CPI, Stats SA largely follows the methodology guidelines in the 2020 Consumer Price Index Manual: Concepts and Methods published jointly by the International Monetary Fund, International Labour Organization, Statistical Office of the European Union, United Nations Economic Commission for Europe, Organisation for Economic Co-operation and Development, and World Bank.
