Exchange Rate Pass-Through to Consumer Prices in South Africa: Evidence from Micro-Data

John Muellbauer, Janine Aron (), Neil Rankin and Kenneth Creamer ()

No 9735, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A sizeable literature examines exchange rate pass-through to disaggregated import prices but very few micro-studies focus on consumer prices. This paper explores exchange rate pass-through to consumer prices in South Africa during 2002-2007, using a unique data set of highly disaggregated data at the product and outlet level. The paper adopts an empirical approach that allows pass-through to be calculated over various horizons, including controls for domestic and foreign costs. It studies how pass-through differs across types of consumption goods and services and draws some aggregate implications about pass-through, using actual weights from the CPI basket. The heterogeneity of pass-through for different food sub-components and the role of switches between import and export parity pricing of maize is investigated and found significant for five out of ten food sub-components. Overall pass-through to the almost 63 percent of the CPI covered is estimated at about 30 percent after two years, but is higher for food.

Keywords: Exchange rate pass-through; Exchange rate volatility; Consumer prices; Goods prices; Services prices; Food prices; Cpi; Monetary policy (search for similar items in EconPapers)
JEL-codes: C23 C51 C52 E3 E31 E52 E58 F31 F39 (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-afr, nep-int, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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