Category Archives: Inflation

The Namibian inflation rate rose to 5.6% in April, materially quicker than the 4.5% rate recorded in March. Prices in the overall NCPI basket rose by 1.4% m/m, the largest monthly increase since January 2018. On a year-on-year basis, overall prices in seven of the twelve basket categories rose at a quicker rate in April than in March, with two categories recording slower rates of inflation and three categories recorded prices consistent with the prior month. Prices for goods increased by 7.5% y/y while prices for services increased by 3.1% y/y in April.

Rather unsurprisingly, transport was the largest contributor to the annual inflation rate again in April, contributing 2.7 percentage points to the total 5.6% y/y inflation rate. Prices in this category rose by 5.7% m/m and 18.9% y/y. All three sub-categories in this basket item recorded higher inflation on both a monthly and annual basis. The Namibia Statistics Agency’s (NSA) data shows that transport prices were up 9.5% by the end of April. The operation of personal transport equipment sub-category recorded price increases of 8.8% m/m and 27.3% y/y, following the  Ministry of Mines and Energy’s decision to increase petrol and diesel prices by 195- and 295 cents per litre, respectively, in April. Prices of public transportation services rose by 0.1% m/m and 9.8% y/y, in line with the rate recorded last month. The purchase of vehicles sub-category recorded inflation of 1.4% m/m and 5.2% y/y. The Ministry of Mines and Energy’s announcement at the beginning of May to temporarily lower several of the levies charged on fuel for the next three months was welcomed by consumers and businesses alike and should soften the inflationary impact of the high fuel prices to a certain extent.

Food & non-alcoholic beverages was the second biggest contributor to the annual inflation rate in April, contributing 1.1 percentage points. Prices in this basket item rose by 1.4% m/m and 5.7% y/y. As has been the case in the prior three months, all thirteen sub-categories recorded price increases on an annual basis. The largest increases were recorded in the prices of oils and fats which rose by 23.4% y/y, followed by fruit, which recorded prices increases of 13.8% y/y. The NSA’s data shows that consumers in the eastern, southern and western regions of the country paid the highest price for 750ml of pure sunflower oil at N$37.50, followed by the central region at N$32.60, while consumers in the northern parts of the country paid N$29.76. 

Alcohol & Tobacco inflation accelerated from 4.1% y/y in March to 4.5% y/y in April and was the third-largest contributor to April’s annual inflation rate. On a monthly basis, prices in the basket item increased by 0.9% m/m. The prices of tobacco products rose by 3.3% m/m and 6.3% y/y, while the prices of alcoholic beverages increased by 0.3% m/m and 4.1% y/y.

Namibia’s annual inflation rate of 5.6% in April is the highest rate in the last 58 months. Rising food and transport prices remain the primary drivers of the Namibian inflation rate, contributing 67% to the country’s annual rate in April. The uptick in the rate in April means that the 1.4 percentage point differential between Namibia and South Africa’s inflation rates that have been in place since August last year is now significantly smaller. South Africa’s inflation rate came in just below the SARB’s upper end of the target band at 5.9% in March. With inflationary pressure expected to remain high, the SARB’s MPC is expected to hike rates by 25 bps at its May meeting, leaving the BoN with little choice but to follow in-kind in at its MPC meeting June. IJG inflation model currently forecasts inflation to average between 5.0% and 6.2% in 2022. 

Namibian’s annual inflation rate remained steady at 4.5% in March. Prices in the overall NCPI basket increased by 0.6% m/m. On a year-on-year basis, overall prices in four of the twelve basket categories rose at a quicker rate in March than in February, with five categories recording slower rates of inflation and three categories recorded consistent with the prior month. Prices for goods increased by 5.7% y/y while prices for services increased by 2.9% y/y in March.

Transport was rather unsurprisingly the largest contributor to the annual inflation rate in March, contributing 1.9 percentage points to the total 4.5% y/y inflation rate. Overall prices in this basket item increased by 2.6% m/m and 13.8% y/y. All three sub-categories in this basket item recorded higher inflation on a year-on-year basis. The operation of personal transport equipment sub-category recorded the largest increase in prices of 4.1% m/m and 19.2% y/y, following the Ministry of Mines and Energy’s decision to increase petrol and diesel prices by 120- and 130 cents per litre, respectively, in March. Price of public transportation services rose by 9.8% y/y, marginally quicker than the 9.6% recorded in February, while the purchase of vehicles sub-category recorded inflation of 4.0 % y/y . We expect transport inflation to remain high over the medium term, as global oil supply remains tight amid the Ukraine crisis. 

Food & non-alcoholic beverages, the second largest basket item by weighting, contributed 0.9 percentage points to the annual inflation rate in March. Overall, prices in this basket item rose by 0.4% m/m and 4.6% y/y. All thirteen sub-categories recorded price increases on an annual basis. The largest increases were recorded in the prices of oils and fats which rose by 15.6% y/y, followed by the prices of fruits, which increased by 10.0% y/y, and  the ‘food’ sub-category which increased by 4.7% y/y. 

Prices in the alcohol and tobacco category, the third largest basket item by weighting, increased 4.1% y/y in March. On a monthly basis, prices in the basket item increased by 0.4%, following a 0.8% m/m decrease in February. The prices of alcoholic beverages increased 0.3% m/m and 4.1% y/y while tobacco prices rose by 0.7% m/m and 4.1% y/y.

Namibia’s annual inflation remains above its 12-month average of 4%. While March’s annual inflation rate of 4.5% remained unchanged from last month, the risk of rising inflation is high given the upward pressure expected on fuel and food prices, coupled with the fact that it is unlikely that interest rate hikes by the Bank of Namibia will significantly dampen these inflationary pressures in the near term. Transport and food remain the primary drivers of Namibian’s inflation, contributing 62% to country’s annual inflation rate in March. IJG’s inflation model currently forecasts inflation to average between 4.4% and 5.1% in 2022 with the upper end of the range more likely to materialise.

Namibian’s annual inflation rate slowed marginally to 4.5% y/y in February, following the 4.6% y/y increase in prices recorded in January. Prices in the overall NCPI basket increased by 0.2% m/m. On a year-on-year basis, overall prices in two of the twelve basket categories rose at a quicker rate in February than in January, eight recorded slower rates of inflation and two remained steady. Prices for goods increased by 5.5% y/y and prices for services increased by 3.0% y/y.

Transport was the largest contributor to the annual inflation rate in February, with prices in this category increasing by 1.0% m/m and 13.2% y/y. This basket item contributed 1.8 percentage points to the annual inflation rate in February. Prices in all three sub-categories recorded price increases on a year-on-year basis. The operation of personal transport equipment recorded the largest increase in prices of 1.7% m/m and 18.5% y/y. This was largely due to fuel prices being up 33.3% y/y in February.  The purchase of vehicles sub-category recorded slower inflation at 3.7% y/y while the prices of public transportation services rose by 9.6% y/y.

Food & non-alcoholic beverages, the second largest basket item by weighting, contributed 1.0 percentage point to the annual inflation rate in February. Prices in this basket item rose by 1.0% m/m and 5.4% y/y. All thirteen sub-categories recorded price increases on an annual basis. The biggest increases were recorded in the prices of oils and fats which rose by 13.5% y/y, followed by the prices of fruits, which increased by 12.6% y/y, and meat which increased by 7.2% y/y.

Alcohol and tobacco inflation slowed to 3.5% y/y in February from the 3.9% y/y increase recorded in January. On a monthly basis, prices in the basket item decreased by 0.8%. The alcoholic beverages sub-category recorded a price decrease of 0.6% m/m and up 3.4% y/y. Tobacco prices were down 2.0% m/m but rose 3.8% y/y.

February’s inflation print of 4.5% is the first month of (marginally) slower price increases following five consecutive months of rising inflation. Transport and food costs continue to be the main drivers of Namibian inflation, with the two categories contributing 62% to February’s annual rate.. IJG’s inflation model currently forecasts inflation to average between 3.4% and 5.0% in 2022, although the upper end of the range seems more likely at this stage as risks remain tilted to the upside.