Exchange Rate Pass-Through to Consumer Prices in South Africa: Evidence from Micro-Data
Janine Aron (),
Kenneth Creamer (),
John Muellbauer () and
Neil Rankin ()
No 9735, CEPR Discussion Papers from C.E.P.R. Discussion Papers
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: consumer prices; CPI; exchange rate pass-through; exchange rate volatility; food prices; goods prices; monetary policy; services prices (search for similar items in EconPapers)
JEL-codes: C23 C51 C52 E3 E31 E52 E58 F31 F39 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-afr, nep-int, nep-mac and nep-opm
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Journal Article: Exchange Rate Pass-Through to Consumer Prices in South Africa: Evidence from Micro-Data (2014)
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