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by Mathias Manguzvane, Koketso Mantsena and Mpho Rapapali
This note uses an event-study approach to examine how South Africa’s inflation has responded to global oil price shocks.
The results show that oil price shocks differed markedly in size, speed and duration, resulting in very different inflation outcomes.
Pass-through was strongest in the food, transport and core goods components of the consumer price index (CPI), highlighting the uneven transmission of oil price shocks across the CPI basket.
Inflation persistence varied considerably across shocks, with many CPI components remaining elevated long after the initial fuel price shock.
The inflation environment also matters given that oil price shocks have larger and more persistent effects when they coincide with broader inflationary pressures.
