What Is Inflation?
Business Terms
Explained Simply
In South Africa, inflation is measured by the Consumer Price Index (CPI), which Statistics South Africa (Stats SA) publishes monthly. The inflation rate is the percentage change in CPI compared with the same month a year earlier. The South African Reserve Bank (SARB) states its inflation target as 3%, with a tolerance band of plus or minus 1 percentage point, and uses the repo rate to pursue it. For a business, inflation raises the cost of stock, rent and wages, so prices and salary increases may need regular review. For employees, a pay rise below inflation means a real drop in buying power. Check Stats SA for the latest CPI figure, as it changes every month.
Related Terms
- Gross SalaryGross salary is the total amount an employer pays an employee before any deductions such as PAYE tax, UIF contributions, pension fund contributions, or medical aid.
- Net SalaryNet salary (also called take-home pay) is the amount an employee receives after all deductions — including PAYE, UIF, pension contributions, and medical aid — have been subtracted from their gross salary.