Statistics SA has just released its June consumer price index data, the annual increase of which is commonly referred to as the ‘inflation rate’.

The data finds that consumer prices only increased by 5.5% from June 2012 to June 2013.

We need to keep perspective here, as the consumer price index is a narrow measure of overall prices in the economy, and a very important form of price inflation, namely asset price inflation, is ignored.

An accurate proxy for general asset price inflation is the JSE All share index, which has risen 25% from start June 2012 to start June 2013.

Meanwhile, raw commodity prices as measured by the Continuous commodity price index, have risen 22.2% from start June 2012 to start June 2013 (in rand terms).

This means a couple of things. 1) The strong asset price inflation indicates there is still some consumer price inflation coming down the pipe. 2) It could indicate that Stats SA is understating the extent of consumer price inflation (not necessarily intentionally). 3) That if someone is benchmarking salary increases against consumer price inflation, his salary is going down in terms of the assets/raw commodities that his salary can buy.