Those were the good old days

Someone recently found this old advertisement from 1978. A “value for money” stay at the 4 Seasons Hotel Durban, a three star hotel in the central business district.

At only R10.95 per day, it included a room, free entertainment and three 8 course meals per day. This sounded like an exceptionally good deal to me. To put this into perspective, I headed over to another website to put it into today’s money. According to the South Africa Inflation Calculator on, R10.95 in 1978 equals to R442.93 in 2024. Using official World Bank data, the rand had an average inflation rate of 8.38% per year between 1978 and now.

R10.95 in 1978, adjusted for inflation

If that were true, we’d be able to get the same deal today. I don’t know about you, but when I fire up any hotel booking site, there aren’t any deals in my area for R442.93 anymore. Furthermore, the site goes on to say: “When R10.95 is equivalent to R442.93 over time, that means that the ‘real value’ of a single South African rand decreases over time. In other words, a rand will pay for fewer items at the store.”

Inflation, literally means the increase in the total supply of money. As the amount of money that exists is increased, your spending power become less for every cent that you earn.

And there it is. Instead of thinking of prices going up, we should actually look at how much less we can buy with the same amount of money.

Buying power of R10.95 over time, 1978 – 2024

Inflation – a bug of a feature?

To remedy the situation, economists introduced the consumer price index (CPI). Joseph Lowe first developed the theory of a price basket index in 1822. His fixed basket was relatively simple. Based on his theories, later economists formed our modern definition of CPI with a changing basket of goods.

According to the Department of Statistics (StatsSA), “The Consumer Price Index (CPI) measures monthly changes in prices for a range of consumer products. Changes in the CPI record the rate of inflation. The CPI can also be used as a cost-of-living index.”

Problems with CPI

Okay, imagine you have a shopping list of things you buy regularly, like toys, food, and clothes. This list helps you understand how much things cost over time. But there’s a problem with this list. It’s like trying to measure a ruler with another ruler that keeps changing size.

Here’s why: Let’s say you use this list to see if prices are going up or down. But as prices change, people might buy different things because they can’t afford the old ones anymore. So, the list changes too, to reflect what people are buying now.

But then, since the list changed, it’s like trying to measure with a ruler that changed size because of the thing you’re trying to measure. It’s a bit like chasing your tail!

So, the problem is, this special list, called the CPI, doesn’t give us a clear idea of how much our money is worth because it keeps changing based on what people buy, which is influenced by how much things cost. It’s like a never-ending loop that doesn’t really tell us anything useful about the value of our money.

If you’d like to do a deep dive into why CPI is a flawed metric, I suggest reading The Fiat Standard by Saifedean Ammous, especially the chapter on Fiat Mining.

Not all money is inflationary

One might argue that all money should decrease in value over time. Not exactly true. Bitcoin as digital money is deflationary by design. This peer-to-peer currency can be used to exchange value between people. Since it holds its value very well, it also makes a good store of value.

Other measurements of inflation

The Big Mac Index

The Big Mac Index was developed by The Economist in 1986. Based on the theory of purchasing-power parity (PPP). That’s what the Big Mac Index does. It looks at the prices of Big Mac burgers in different countries to see if money is fair everywhere. It’s like a fun way to check if money is fair all around the world.

Big Mac Index – January 2024

Wacky Wednesday Index

Based on the above Big Mac Index, I floated the idea of a Wacky Wednesday Index on Twitter. The Wacky Wednesday is the Gold Standard of Hamburger Specials in South Africa. The problem with this is that the quality of the burger might change. The company might substitute the ingredients with inferior ones to keep the price of the burger special reasonable.

Shisha Nyama Index

Shisa Nyama means ‘burnt meat’ in Zulu. The Shisa Nyama Index, developed by Bloomberg crunches data from the Pietermaritzburg Economic Justice and Dignity group of 14 key ingredients in braais consumed in South African townships.

Here are the 14 ingredients used:

  • onions,
  • cooking oil,
  • samp,
  • maize meal,
  • beef,
  • wors,
  • spinach,
  • chicken portions,
  • carrots,
  • curry powder,
  • tomatoes,
  • salt,
  • green pepper
  • potatoes

Braaibroodjie index

In keeping with the above national passtime, the Braaibroodjie Index was developed by Johann Biermann as truly South African way of keeping track of our spending power. My readers are mostly South African, but for those not in the know, braaibroodjies or barbeque sandwiches, are a staple of the South African braai (barbeque) experience. The construction of a South African braaibroodjie is a careful science requiring the exact and balanced ratio of tomato, onion and cheese according to this recipe.

Braai broodjies are sandwiches cooked on an open fire. Source: Wikipedia

Included in the Braaibroodjie Index are indicators that are provided by StatsSA on a montly basis.

  • white bread,
  • margarine,
  • salt,
  • cheddar,
  • onions,
  • tomatoes.

He runs two different models, one as per above and one that includes chutney, a fruit-based preserve that is used as a condiment. This is a contentious topic, as many die-hard braai purists do not include this ingredient in their recipe. I personally stand with the “no-chutney” brigade but do not dislike chutney in other dishes.


So, after diving into all these fancy-schmancy indices, it’s clear that measuring inflation and purchasing power is no walk in the park.

The classic Consumer Price Index (CPI) is alright, but it’s got its flaws. It’s like trying to catch a moving target because it changes with what people buy and how much they’re willing to spend.

There are some cool alternatives, like the Big Mac Index for a global perspective and the Braaibroodjie Index for a taste of home. These indices give us different angles to peek at how our money’s doing.

In the end, figuring out inflation and what our money can buy is a tricky business. But with these diverse indices, we’re better equipped to understand the ever-changing economic landscape.

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