Category Archives: Inflation

The Namibian annual inflation rate increased further to 6.6% in April. On a month on month basis, prices continued to rise, up 0.6% after the 0.8% uptick seen last month. On a year on year basis, eight of the twelve basket categories grew at a quicker rate in April than in March, pushing up overall inflation. The biggest contributor to inflation on a monthly basis were price increases of food and non-alcoholic beverages once again, while on an annual basis housing and utilities price increases have contributed the most to inflation.

On a month on month basis price increases in the food and non-alcoholic beverages basket category have largely been driven by fruit and vegetables price increases as well as increases in milk, eggs and cheese prices. Annual inflation in the food and non-alcoholic beverages basket category jumped to 11% in April from 9.7% in March. This basket category has experienced rapid inflation over the last three months as the Southern African region continues to suffer from adverse climatic conditions, depreciation in the Namibian dollar as well as rebasing effects due to the impact of low oil prices on prior periods.

Alcoholic beverages and tobacco as the fourth largest basket category made the second largest contribution to monthly inflation followed by furnishings household equipment and routine maintenance costs. On a year on year basis price increases on alcoholic beverages and tobacco slowed from 7.8% in March to 7.1% in April. Alcoholic beverages and tobacco inflation has been consistently above the average inflation figure for most of the last five years when looked at on an annual basis, more consistently so than almost any other basket category.

The annual inflation rate for the category housing, water, electricity, gas and other fuels was stable at 7.5% in April, after spiking from an average rate of well below 3% in 2015, to 7.6% in January this year. Rapid price increases have been seen in this basket category mainly as a result of increases in inflation for rentals and other dwellings. Price increases for rentals and other dwellings have been extremely low for a number of years, as reported by the NSA, and the sudden spike at the beginning of the year has largely resulted in the elevated level of annual inflation we are currently seeing.

The annual rate of inflation in the transportation basket category, the third largest category, slowed further in April to 2.8% from 4.3% in March. Much of this decrease was as a result of fluctuations in the price of oil during the base period as well as currency volatility during April. We expect to see a pickup in transportation inflation due to recent fuel price increases in May as well as base effects coming through on the oil price. This could well drive overall inflation higher still in coming months.

Going forward we expect a further uptick in inflation in May largely due to base effects caused by the drop in oil prices last year as well as more recent currency movements. Adverse effects of the drought currently affecting the region should lead to further increase in food inflation in the coming months, helping to drive overall inflation higher. Namibian CPI has now risen to a level above that of neighbouring South Africa, a situation that we regard as a more accurate reflection of actual inflation pressures experienced by the residents of Namibia. We would expect this relationship to hold going forward.

The Namibian annual inflation rate increased to 6.5% in March, up 0.4 percentage points from 6.1% in February. On a month on month basis, prices continued to rise, up 0.8% after the 0.6% uptick seen last month. On a year on year basis, six of the twelve basket categories grew at a slower rate in March than in February while the other half accelerated, pushing up overall inflation. The biggest contributor to inflation on a monthly basis were price increases of food and non-alcoholic beverages, while on an annual basis it was housing utilities price increases.

The two heavy weighted categories in the basket that experienced accelerated annual inflation were food & non-alcoholic beverages and housing utilities. Food and non-alcoholic beverages inflation was driven by the price increases across the majority of the sub-components, with only soft drinks & juices, non-alcoholic beverages and vegetables prices rising relatively less quickly. The food price increases can largely be ascribed to the drought currently experienced in Namibia and South Africa as is reflected by price increases of fruit, meat and grain products such as bread & cereals.

The annual inflation rate for the category housing, water, electricity, gas and other fuels increased from 7.4% in February to 7.5% in March, contributing 2.1 percentage points to annual inflation. Accelerating price increases in this category was largely driven by electricity, gas and other fuels which increased to 8.9% in March, up from 8.6% in February.

Transport is the third largest basket category by weighting and as the price of transportation flow through to many other basket categories, it has a large impact on overall inflation. The annual inflation rate for the transport basket category slowed down slightly to 4.3% in March down from 4.7% in February. However, we expect to see higher inflation as the effects of the drop in the price of oil over the past year and the knock on effects thereof wear out.

In conclusion, we expect inflation to accelerate further in 2016 as the full benefit of cheap oil has worn out with the weak currency causing import prices to rise. Looming drought conditions as well as increasing utilities costs should further see inflation pick up in basket categories such as food and non-alcoholic beverages, and alcoholic beverages and tobacco and housing.

The Namibian annual inflation rate increased to 6.1% in February, up 0.8 percentage points from 5.3% in January. On a month on month basis, prices continued to rise, up 0.6% after the 2.4% spike seen last month. On a year on year basis, six of the twelve basket categories grew at a slower rate in February than in January while the other half accelerated, pushing up overall inflation. Transport inflation spiked during February as the effects of the drop in the price of oil over the past year, and the knock on effects thereof on the rest of the basket has worn out. However, the biggest contributors to inflation on a monthly and on an annual basis were price increases of food and non-alcoholic beverages and housing utilities.

The three heavy weighted categories in the basket that experienced accelerated annual inflation were food & non-alcoholic beverages, alcoholic beverages & tobacco and transport. Food and non-alcoholic beverages inflation was driven by the price increases across the majority of the sub-components, with only milk, cheese & eggs, non-alcoholic beverages and coffee, tea & cocoa prices rising relatively less quickly. The food price increases can largely be ascribed to the drought currently experienced in Namibia and South Africa as is reflected by price increases of fruit, vegetables and grain products such as bread & cereals.

The annual inflation rate for the category alcoholic beverages & tobacco increased from 7.5% in January to 7.9% in February and increased 0.6% on a monthly basis. Accelerating price increases in this category was largely driven by alcoholic beverages which increased to 8.3% in February, slightly offset by prices of tobacco easing to 6.7% in February, down from 7.4% in January. On the back of the announcement by the Minister of Finance that sin-taxes have been increased, we expect prices of alcoholic beverages & tobacco to accelerate further in March.

The annual inflation rate for the transport basket category spiked to 4.7% in February after turning positive in January for the first time in twelve months. The reason for this jump is primarily due to base effects, as the effects of the drop in the price of oil over the past year have now worn out. Transport is the third largest basket category by weighting and as such has had a large impact on overall inflation. The prolonged low fuel prices, due to the oil rout, have provided consumers with some price relief worldwide, and to some extent in Namibia as well. The effects of cheap transportation flow through to many other basket categories, and in this way contributed to lower overall inflation. However, we expected to see higher inflation as the effects of the drop in the price of oil over the past year and the knock on effects thereof wear out.

In conclusion, we expect inflation to accelerate further in 2016 as the full benefit of cheap oil has worn out with the weak currency causing import prices to rise. Looming drought conditions as well as increasing utilities costs should further see inflation pick up in basket categories such as food and non-alcoholic beverages, and alcoholic beverages and tobacco and housing.