Globalization and Inflation Nexus in South Africa: An Empirical Investigation

Abstract

The impact of globalisation on inflation is investigated for South Africa using annual time series data from 1990 to 2022. The study was motivated by the need to establish if the notion that globalisation leads to a decrease in prices in the domestic economy still holds water for South Africa. The study employs ARDL to explore the nature of the relationship between globalisation and inflation. Using trade openness as a measure of globalisation and the rate of change of the consumer price index as a measure of inflation, the study found globalisation to worsen inflation pressures in South Africa irrespective of the timeframe considered. Thus, South African authorities need to put measures in place to reduce the impact of globalisation on price levels. Policy implications are discussed