The dynamics of inflation in South Africa: implications for policy

South Africa is trying to reduce its rate of inflation to the level of those of its main trading partners, Germany, Japan, the UK, and the USA. The tempo of price increases is dropping but the continued inflation differentials raise the question of whether the goal of inflation parity is feasible. The article begins with the measures such as interest rates taken by the South African Reserve Bank (SARB) to combat inflation. In doing this the authors distinguish three main determinants of inflation. This is followed by five sections. The first provides background information about trends and inflation and monetary policies in South Africa over the period 1960-1999. After this comes a review of the theoretical and empirical literature on the determinants of inflation. The third section contains the data sources and salient features of the model chosen. This is followed by the results in Section 4. The final section contains a discussion of policy implications. Bibliogr. [ASC Leiden abstract]