A new inflation measure has been developed to monitor underlying price developments in South Africa, termed supercore inflation. This measure includes components of core inflation that respond to general economic conditions, as measured by the output gap.
The findings indicate that demand-driven inflationary pressures, as measured by supercore inflation, are currently balanced. Inflation outcomes have hovered around the target midpoint over the past year. The observation of balanced demand-driven inflationary pressures aligns with a nearly closed output gap over the past year, as indicated by the South African Reserve Bank’s Quarterly Projection Model.