Today's Labour News

BL Premium reports that calculations done by SA’s biggest asset manager, Ninety One, show that personal inflation has outstripped the official consumer price index (CPI) data from Stats SA, leaving consumers much poorer.

The personal rate of inflation represents how the cost of living is rising, irrespective of the national average figure. Using newspaper adverts, the money manager compared data from 1986 with the current prices of several household goods, including Surf, All Gold tomato sauce, Sunlight dishwashing liquid and Twinsaver. Ninety One then calculated the annual compound change from 1986 to the present. “In short, the average annual increase of 9.1% of this household goods basket is above the official annual inflation rate of 7.5% over this period. So our intuition that our personal inflation rate is higher than the official Stats SA inflation rate would suggest it does not appear to be so far off the mark,” said Paul Hutchinson of Ninety One. The data also shows how insidious and corrosive inflation is – finding that if one were earning R10,000 a year in 1986, one would need to earn R150,000 today, just to keep up with the official inflation rate. This figure goes up even further when considering the personal rate of inflation, putting it at R260,000. “The analysis reinforces the key insight that hiding in cash or cash plus – enhanced cash – income-yielding investment solutions is not a sustainable long-term investment strategy. This is a critical observation, given that investors underestimate for how long they will be invested,” Hutchinson commented.

• Read the full original of the report in the above regard by Kabelo Khumalo at BusinessLive (subscriber access only)

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