SAJEMS NS 8 (2005) No 4 499 A PERSPECTIVE ON THE MEASUREMENT OF INFLATION CREDIBILITY J Rossouw 1 Reserve Bank and University of Pretoria F Joubert 2 Department of Economics, University of Pretoria Abstract Inflation targeting anchors inflation expectations, which are not within the sphere of control of the authorities, but can only be influenced over time by consistent policyF As public distrust of inflation figures will feed through to inflation expectations, this paper highlights a comparison of the credibility of two different measures of inflation in terms of an inflation credibility barometerF In a comparison of the barometer results to the analysis of inflation perceptions reported by other central banks, it is concluded that the barometer delivers superior resultsF The main recommendation is that respondents should be requested in a follow-up study to indicate whether they attach a higher degree of credibility to the overall inflation rate or the rate used for targeting purposesF JEL E31, E52, E58 1 Background A recent article in the South African Journal of Economics, titled Supporting an inflation targeting policy with the measurement of inflation credibility (Rossouw & Joubert, 2005: Vol 73: 2), highlights the results of two pilot studies aimed at the compilation of an inflation credibility barometer in support of the anchoring of inflation expectationsF Inflation targeting anchors inflation expectations, which are not within the sphere of control of the authorities, but can only be influenced over time by consistent policyF As a result, public distrust of inflation figures will feed recursively through to inflation expectationsF Keeping the above perspectives in mind, the authors compiled questionnaires to highlight a comparison of the credibility of two different measurements of inflation through the use of the inflation credibility barometerF The aim was to reiterate some of their earlier recommen- dations with respect to the use of an inflation credibility barometerF Two of the three recommendations and some observations of the earlier study are summarised in section two of this paper, as well as some observed initiatives of other central banks in measuring or improving inflation credibilityF The methodology followed in designing a questionnaire for testing these two recommen- dations is discussed in section threeF The findings are discussed in section fourF Section five highlights the conclusions and recommen- dationsF 2 Some earlier recommendations and observed initiatives Based on two different pilot studies involving three separate groups of students at the University of Pretoria, Rossouw and Joubert (2005) recommended 3 , inter alia, that: (i) an abridged questionnaire, asking only one question about the perceived accuracy of a rate of inflation, should be used to measure the credibility of inflation and compile an