Harare, Zimbabwe (News of the South)-Poor people spend more than 40% of their overall expenses on food which is a greater proportion than any other income group resulting in droughts and poor economic conditions affecting them more than others.
Other large components which make up a poor family’s expenses are housing, alcohol and tobacco and transport.
Price changes in these categories also affect their living standards.
In a report on South Africa’s Consumer Price Index Patrick Kelly, Executive Manager for Price Statistics has provided some insights into how inflation affects the most vulnerable.
“As an illustration of this pattern, while headline annual food inflation was 9,8% in March this year, it was 13,6% for rural residents and 11,8% for the poorest households”.
“However, in May 2015 when the headline food inflation figure was 4,6%, rural residents paid 2,8% more for food and the poor 3,8% more”.
“The poor therefore experience greater variability in inflation, with high inflation periods – leading to more financial stress – but low inflation periods providing a relative measure of relief”, he says.
Kelly says in the long run, both the food and total inflation experienced by the poor and rural residents is approximately equivalent to the country as a whole.
This would suggest that short term, targeted, relief measures during high inflation periods are more needed than additional permanent welfare interventions.
The report come at a time severe drought and the depreciation of the rand has driven annual food inflation in South Africa to 9,8% in March which is its highest level in four years according to Kelly.
On the dependability of the Consumer Price Index as statistics for economic evaluation Kelly says they generally reflect the middle class.
“Because higher earners spend more, they implicitly exert greater influence on the overall CPI basket. With the knowledge that the CPI better reflects the working or middle class, rather than the poor, Stats SA publishes numerous additional price indices to analyse changes in the cost of living of specific income and geographic groups”.
“It is true that in times of high food inflation, the poor experience higher overall inflation than the average consumer and that inflation of the poor’s food basket increases more rapidly than that of all other groups”, he said.
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