Category Archives: Inflation

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.

Namibia’s annual inflation rate ticked up to 4.6% y/y in January, following the 4.5% y/y increase in prices recorded in December. Prices in the overall NCPI basket increased by 1.1% m/m. On a year-on-year basis, overall prices in eight of the twelve basket categories rose at a quicker rate in January than in December, while the other four recorded slower rates of inflation. Prices for goods increased by 5.8% y/y while prices for services increased by 3.0% y/y.

Transport was once again the largest contributor to the annual inflation figure, contributing 1.9 percentage points to the total 4.6% y/y inflation rate. Prices in this category remained steady month-on-month, following the Ministry of Mines and Energy’s decision to leave fuel pump prices unchanged in January, but increased by 13.5% y/y. The purchase of vehicles sub-category recorded somewhat slower inflation at 3.9% y/y while the prices of public transportation services rose by 9.7% y/y. The operation of personal transport equipment recorded a rise in prices of 19.0% y/y.

Rising tensions between Russia and Ukraine has put markets on high alert for possible disruptions of Russian energy supplies. Coupled with a rebound in the global economy from the pandemic, has resulted in oil prices now trading at 2014 highs. A lack of production capacity and limited investment in the sector will likely result in fuel prices remaining elevated for the majority of 2022. The Ministry’s decision to increase fuel prices by 30 cents- and 40 cents per litre for petrol and diesel, respectively, in February will keep the transport basket item’s inflation rate elevated going forward.

Food & non-alcoholic beverages, the second largest basket item by weighting, contributed 0.9 percentage points to the annual inflation rate in January. Prices in this basket item rose by 0.4% m/m and 5.6% y/y. All 13 sub-categories recorded price increases on an annual basis. The biggest increases were recorded in the prices of fruits which rose by 12.8%, followed closely by the prices of oils and fats, increasing by 12.7%, and meat at 10.6% y/y.

Alcohol & tobacco inflation ticked up from 3.8% y/y in December to 3.9% y/y in January. On a monthly basis, prices in this basket item rose by 0.9%. The alcoholic beverages sub-category recorded a price increase of 1.1% m/m and 3.5% y/y. Tobacco prices were up 0.3% m/m and 5.7% y/y.

Despite January’s inflation print ticking up for a fifth consecutive month, the differential between Namibia and South Africa’s inflation rates remain steady at around 1.4 percentage points, as the chart above indicates. According to the NSA, the prices for the rental payments for dwellings subcategory rose by 1.4% y/y in January. As rental payments make up a large portion (23.3%) of the CPI basket, the low inflationary adjustment means that Namibian annual inflation in 2022 is likely to remain relatively contained. IJG’s inflation model currently forecasts an average inflation rate of 4.2% y/y in 2022, with risks tilted to the upside, particularly stemming from higher food costs and elevated fuel prices. 

Following the SARB’s MPC decision to increase rates by 25 bps last month, we expect the BoN to follow suit at their February MPC meeting after the buffer that has been in place since the start of the pandemic was closed in November.