RATE HIKE UNLIKELY EVEN AS INFLATION HITS FOUR-YEAR HIGH
Statistics South Africa reported yesterday that the consumer price index (CPI) rose 6,4 per cent from August 2012 to August 2013. This is the highest inflation rate since August 2009.
A weak rand, which pushed up the price of petrol by 32c a litre last month, was the major contributor to rising living costs. The petrol component in the CPI rose a massive 23 per cent in the last year. Petrol has a weighting of almost 6 per cent in the CPI basket.
- Use the information in the extract to explain the link/relation between the consumer price index and inflation.
- Suggest ways in which consumers can reduce the effect of:
> The weak rand
> The increased petrol price