An Estimate of the Weight of the Import Component of the South African CPI and CPIX

Abstract

This paper provides an estimate of the share of imports in the CPI and CPIX, calculated from the supply and use tables for 2002. The methodology takes account of both "direct" imports (i.e. imports of final consumer goods) and "indirect" imports (imported intermediate inputs used in the domestic production of consumer goods). Imports make up around 15 per cent of the CPIX and around 14 per cent of the CPI. If these estimates are used as benchmarks for the pass-through from import prices to consumer prices, they suggest that a 10 per cent increase in import prices will result in a 1,5 per cent (1,4 per cent) increase in the CPIX (CPI) in the long run. Furthermore, they imply that approximately 85 per cent (86 per cent) of the movement in the CPIX (CPI) is accounted for by domestic factors. However, it may be that it is the share of importables, rather than the share of imports, that is important in this regard. In this context the impact of import parity pricing on domestic inflation in South Africa is worthy of further investigation.