On Saturday I posted the South African Agricultural Commodities Price Index, with a central message being that South African agricultural commodities prices are depressed – a welcome relief for consumers given the current economic headwinds that constrain the buying power.

The Index is made up of five agricultural commodities, namely: yellow maize, white maize, wheat, soybeans and sunflower seed – with weights derived from export volumes. These are broadly traded commodities and their products have a higher weighting in South Africa’s food price index.

So, economists Eliphas Ndou and Thanda Sithole suggested that the Index should be standardised — that way values above zero imply inflationary pressures and below zero implied subdued/muted inflationary pressures, which is exactly why I am updating this post with a standardised Index (see chart below).

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Source: Sithole and Sihlobo (2018)

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Oh, the historical average and standard deviation, used to standardize the index, is computed from 03 January 2011 to 29 December 2017.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

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