Contemporary

Inflation

Inflation is a sustained rise in the general price level, measured in South Africa mainly by Stats SA's consumer price index.

CAPS

Grade 12 · Economics · Contemporary

Economics wants the concept, then the diagram or the data, then the consequence.

  • The papers

    Paper 1 is macroeconomics and economic pursuits. Paper 2 is microeconomics and contemporary economic issues. Each paper is 150 marks.

  • How to write it

    Define the term as CAPS uses it. If a graph is asked for, label both axes, the curves, and the equilibrium or the shift. Then say what happens to price, quantity, growth, inflation or unemployment. A curve with no labels does not explain.

  • How a marker reads it

    A common mix-up is saying prices fall when inflation falls, when they still rise, only more slowly.

Essays are marked on the introduction, a body that applies the theory, and a conclusion that answers the question. A list of definitions is not an argument.

Worked theory

Worked theory. The CPI rises from 120,0 to 124,2 over a year: (124,2 − 120,0) ÷ 120,0 × 100 = 3,5%. A pensioner whose income is fixed can now buy 3,5% less, while someone repaying a fixed loan repays with money worth less.

More worked examples

  • Fuel price jump

    When the oil price and a weaker rand push petrol up, taxi fares and food transport costs rise too. Prices rise from the cost side, so this is cost-push inflation.

  • Repo rate hike

    The Reserve Bank raises the repo rate by 0,25 percentage points. Banks raise prime, bond and credit repayments rise, households spend less, and demand pressure on prices eases.

In ordinary words

The inflation rate is the percentage change in the CPI over a year. Demand-pull inflation comes from spending growing faster than output; cost-push inflation comes from rising costs such as wages, fuel or a weaker rand. The Reserve Bank raises the repo rate to cool spending and keep inflation near its target.

In South Africa

A till slip from a supermarket compared with the same trolley a year later.

Part 1 / 4

What it is

Inflation is a sustained rise in the general price level, measured in South Africa mainly by Stats SA's consumer price index.

4. Step-by-step working

  1. 01

    Worked theory

    Worked theory. The CPI rises from 120,0 to 124,2 over a year: (124,2 − 120,0) ÷ 120,0 × 100 = 3,5%. A pensioner whose income is fixed can now buy 3,5% less, while someone repaying a fixed loan repays with money worth less.

  2. 02

    Say it back

    Inflation rate = change in CPIold CPI × 100.

More worked examples

Board walkthroughs on this topic. Open one, copy the working, then try the next.

Example 1 / 20

The CPI rose from 140,0 to 147,7. Calculate the inflation rate.

4. Step-by-step working

  1. 01

    Subtract

    147,7−140,0=7,7.

  2. 02

    Divide

    7,7140,0×100=5,5%.

How we got there

Read this like a teacher at the board. We go slowly, name every number, and say why we take each step.

Explain in another language · 11

1. What is the question asking?

Read the question twice. Circle the unknown. Underline every number and unit. The paper is asking: The CPI rose from 140,0 to 147,7. Calculate the inflation rate.

Before any working — hunt first

Given

Numbers and units already in the sentence: 140,0 to · 147,7. Copy each one into a column. A name without a number is not given.

Missing

After you copy the given, the letter that still has no number is missing. The paper is pointing at: the inflation rate. Circle that word — that is the missing variable.

Find

We are required to find: the inflation rate. Write that as a symbol on the left, with a question mark, before you touch a formula.

Calculate

What we need to calculate: (new − old) ÷ old × 100. Then substitute the given, one line at a time, to get the inflation rate.

In other words — as if you have never seen this before

If you have never seen this before: (new − old) ÷ old × 100. We will name a method in words, write the formula with no numbers, then substitute one line at a time.

2. What do we already know?

Old CPI 140,0; new 147,7.

3. Which method — and why this one?

(new − old)old×100.

4. Step-by-step working

  1. 01 / 05

    Subtract

    147,7−140,0=7,7.

    Why this step: We only do one job per line so a marker can follow the marks — and so you can find a slip without starting over.

  2. 02 / 05

    Divide

    7,7140,0×100=5,5%.

    Why this step: We only do one job per line so a marker can follow the marks — and so you can find a slip without starting over.

  3. 03 / 05

    Step G — Sense-check the size

    Ask: is this the kind of number a Grade 10–12 paper would want? A speed of 3 000 ms for a learner walking, or a probability bigger than 1, means a unit or algebra slip. Estimate first: round the numbers and do the sum in your head.

    Why this step: Markers write ‘unrealistic’ in the margin when the method is right but the size is wild. A 10-second head check often finds a missing 10² or a unit that never changed.

  4. 04 / 05

    Step F — Box the answer with its unit

    5,5%.

    Why this step: A number without a unit is half a mark on a Physics paper, and a marker can miss a Maths answer that is buried in working.

  5. 05 / 05

    Step H — What the marker is looking for

    On an NSC memo you usually earn: (1) a method mark for naming the right formula or idea in words, (2) an accuracy mark for substituting the given numbers with units, (3) an accuracy mark for the boxed answer with its unit. Write those three lines even if you are unsure of the arithmetic — blank pages score zero.

    Why this step: First-timers chase the final number and leave the method blank. The memo still pays out for the idea and the substitution even when the last line is wrong.

5. The answer

5,5%.

Copy onto your answer sheet — in this order

Answer: 5,5%.

6. Check it like a marker

Always show the formula.

7. A trap first-timers fall into

First-timers often grab the first formula they remember, mix units (cm with m, minutes with seconds), or drop a minus sign. Write the formula in words first: “this equals that, because…”

Ntsako · fx-991ZA PLUS. Tap to calculate.