Author Archives: IJGResearch

The Namibian annual inflation rate increased to 6.9% in September, up from the 6.8% recorded in August. Prices increased by 0.2% month on month. Half of the basket categories showed higher inflation than the previous month, the most notable being Food inflation which has accelerated to 12% y/y.

Housing, water, electricity, gas and other fuels, which increased by 8% y/y was the largest contributor to the overall annual inflation figure due to it being the largest component of the basket. This was driven largely by the 12% increases seen in water supply, sewerage service and refuse collection and electricity gas and other fuels sub groups. Rapid price increases have been seen in this basket category mainly as a result of increases in inflation for water supply, sewage services and refuse collection after the City of Windhoek increased water tariffs in July.

Food prices increased by 0.9% month on month led by the large increases in the prices of fish (up 4.4% from August) and fruit (up 3.3% m/m). Food price inflation remains worrying with most of the sub groups showing yearly increases in the high teens. Coffee, tea and cocoa increased by 19.5% y/y, sugar jam and honey was up 18.7% y/y and fruit showed an increase of 17.8% y/y. The upwards pressure on food prices are mainly a result of the continuing drought in Southern Africa.

Inflation expectations remain high. South African inflation is expected to average 6.4% in 2016 and 5.8% in 2017, according to the South African Reserve Bank. These expectations are largely driven by currency weakness and the pass though effect of higher Import prices. The effect of higher food inflation due to the continuing drought also has a negative effect. Due to inflation expectations which return to the target band and low level of growth we do not anticipate rate increases from the South African MPC anytime soon.

Our expectations of Namibian inflation for 2016 is for an average of 6.5% The main reason for relatively high level being the increases seen in administered prices, but also the large step-up in rental inflation seen since January 2016. Our expectations for 2017 are also above the South African target band at of 3-6%, at 6.4%.