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

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

Journal of Development Studies, 2014, vol. 50, issue 1, 165-185

Abstract: A sizeable literature examines exchange rate pass-through to disaggregated import prices, but few micro-studies focus on consumer prices. This article explores exchange rate pass-through to consumer prices in South Africa, for 2002-2007, using a unique data set of highly disaggregated data at the product and outlet level. The empirical approach allows pass-through to be calculated over various horizons for different goods and services. The heterogeneity of pass-through for food sub-components is considerable. Switches between import and export parity pricing of maize are found significant for five out of ten food sub-components. Using actual weights from the CPI basket, overall pass-through to the almost 63 per cent of the CPI covered is about 30 per cent after two years, and higher for food.

Date: 2014
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Working Paper: Exchange Rate Pass-Through to Consumer Prices in South Africa: Evidence from Micro-Data (2013)
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DOI: 10.1080/00220388.2013.847178

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