Stats SA said inflation rose 0.1% month on month in May, from 4.4% in April. Photo: Supplied
The surge in global inflation has complex drivers and, for now, there is no clear end in sight. Inflation does not affect everyone equally, the poor are always the hardest hit. South Africa has so far managed to avoid the sharp rise in inflation seen elsewhere, but this is no longer the case. Higher policy rates and a new target are needed to ensure inflation does not become excessively persistent, writes Marie Antelme.
Everyone knows what inflation is – more or less. Admittedly, inflation is very personal, it affects the prices we pay for our goods and services. This has a big impact on our ability to choose what we spend our money on and how much money we should spend!
But we have to look beyond personal circumstances and even the local economy to understand that the scope of inflation is much broader. There is a huge body of academic research on the matter and much of modern history is steeped in the history of inflation. In the past inflation has been used by politicians and policy makers to control and manipulate socio-political outcomes, it has shaped politics, impacted societies and had a material effect on economics and politics poor. In 1974, Gerald Ford, America’s 38e president, famous for declaring inflation to be “public enemy number one”.
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