Whenever Statistics South Africa (StatsSA) releases the consumer price index (inflation) figure, I always wonder whose basket of goods they are using, because I can assure you that my living costs are increasing well above the 5.2% CPI recorded for the year to December 2015.

So I decided to spend some time unpacking the official CPI basket to compare it to what would be a reasonable spending profile of an urban household earning and spending R40 000 per month.

The CPI basket allocates a percentage to each item, bringing the total basket to 100%. So for example if an item represents 5%, then in a R40 000 household budget, around R2 000 goes to that item.

Education

According to StatsSA, the average household is spending around 2.95% of their budget on education. Yet for many households that figure is higher. A household with two children at a fee-based government school paying around R1 200 per month per child, that figure would represent 6% of the household budget ‒ and we are not even talking about private school fees. According to StatsSA, education costs rose by 9.35% – well above inflation. The more of your budget you spend on education, the higher your overall inflation rate will be.

Meat vs veg

The items you purchase when you shop for your weekly groceries will also impact your own household inflation rate. Food and non-alcoholic drinks make up 15.41% of the CPI basket, so that assumes the R40 000 household would spend R6 164 per month on food and drinks.

Meat, which makes up 4.56% of the basket, experienced a 4.1% price hike last year while breads and cereals (making up 3.55% of the CPI basket) had an above-inflation increase of 7.5%. Vegetables had one of the highest price increases, at 9.4%, but make up only 1.61% of the basket.

Therefore a vegetarian’s food bill would increase faster than that of the meat-eaters. You can however offset your higher vegetable bill by eating less fat and oil which went up by 14.1%, as well as cutting down on the sugar and desserts, which experienced price increases of 9.4%.

Beer vs wine

The CPI index has beer at 2.45% of the basket. I would like to point out at this stage that it nearly equals the amount spent on education, according to the CPI basket! So maybe we spend too much on beer already, but if a R40 000 household spent even more than R980 per month on beer, their inflation figure will be higher, as beer increased at an annual rate of 8.2%. Consider moving to wine, which only increased at 5.7%.

Electricity

The CPI basket allocates 4.18% of the household budget to electricity and other fuels. That would be around R1 670 per month for a household budget of R40 000. The more you spend on electricity as a percentage of your budget, the higher your household inflation rate.

Water and other services

These are estimated at 2.85% of the basket, which would bring that R40 000 household to R1 425 per month which seems reasonable, but again with water prices increasing at 9.8% last year, the higher the percentage you spend on water, the greater the impact on your living costs.

Transport

This is one of those really strange figures because in order to include movements in car prices, StatsSA allocates 5.98% of the basket to a new car. Prices of new cars increased below inflation at 3.8%, dragging down the overall inflation rate, but if you didn’t buy a new car, it didn’t help you much.

In fact a lot of the “non-essential” items experienced far lower price increases, like package holidays which only went up by 1.1%, or recreation and culture which went up by 2.6%. The problem is that the less money we have, the less we spend on non-essentials and the greater the percentage “essential goods” make up of our basket, pushing our overall inflation rate higher. It’s all a bit of a catch-22, but what is clear from the latest interest rate hike and warnings of higher inflation, is that those bills are just going to keep rising further.