By Jordan Toy, CFA

With price increases across the board as inflation persists globally, it’s certainly been a tough year for most of us. And with the holiday season around the corner, it’s definitely worth understanding what you’re in for cost-wise this December.

Living has become increasingly more expensive as the world grapples with inflation and the seemingly incessant price hikes of most goods and services: think petrol, groceries, wining and dining and Christmas gifts…. The causes of inflation, while still under much debate, are mostly understood to have arisen from – or been amplified by – supply chain snarls; the ongoing war in Ukraine; supply/demand imbalances as a result of the pandemic; unprecedented monetary stimulus in the USA during COVID-19; strong labour markets and pent-up demand – the list goes on and on.

This rather depressing inventory is an instant reminder of the rough ride we’ve all endured of late and has given us even more reason to take a well-deserved break over the year-end period. While it’s important to take this time to switch off and relax, you’re most likely to enjoy yourself more by planning ahead for the holidays so you’re in the know for your impending costs this December.

Inflation, as measured by CPI (Consumer Price Inflation) shows us that prices were up 7.6% on average compared to last year. This is according to recently released data from Stats SA which tracks the prices of various goods and services in the economy over time. The CPI figure is essentially an average of the changes in prices of these good and services. Now, bear in mind that there’s a vast amount of different goods and services in our economy, so Stats SA uses a representative ‘basket’ of goods and services with different weightings applied to each component to obtain an overall CPI number. Currently, there are 412 products and services in the ‘basket’ which are determined by the results of a survey that Stats SA conducts to identify the products and services that households spend most of their money on, thereby giving us a basket that is representative of what factors impact the average South African’s wallet the most. The 412 goods and services within the basket are then classified into 12 broad groups, for example food and non-alcoholic beverages, clothing and footwear, health, transport, and education. The basket changes over time and is updated every four years.

So, to keep our minds and hearts firmly focussed on the holidays, I’ve construed what I feel are the most relevant categories for a holiday, namely, fuel, food, non-alcoholic beverages, alcoholic beverages (including spirits, wine, beer), restaurants, hotels, package holidays and lastly clothing and footwear. Underwhelmingly, the chart below indicates that the prices of all these good and services have increased across the board, with fuel having spiked the most, by some margin.

Price Change For Select Goods & Services October 2022 vs October 2021

The most notable takeaway from the above is that, if you plan on travelling, its highly likely to cost you significantly more than it did last year. Beyond that, once you get to where you’re going, food and drinks are inevitably going to cost a pretty penny, whether you’re dining at home or eating out. If you’ve decided that you’d rather keep some distance from your in-laws this December, the additional cost of staying in a hotel might offer you some solace but will end up costing you roughly 9.9% more than your holiday last year.

I don’t know about you, but I reckon that I’ll be sticking to beers and wine this festive season. Cheers!