Category Archives: Inflation

The Namibian annual inflation rate rose to 3.4% in August, up from 3.3% in July. On a month on month basis prices rose by 0.3% compared to 0.4% in July. On a year on year basis half the basket categories grew at a faster rate than in July while the other half slowed somewhat. Year on year inflation is again well below average, largely due to a drop in the price of oil over the past year, and the knock on effects this has on prices, as well as the heaviest weighted basket item (housing, water and electricity, and gas and other fuels) experiencing prolonged inflation of well below the basket average. 12 month average inflation reached a new low of 3.9%, and has been coming down steadily since November 2014.

On a year on year basis, food and non-alcoholic beverages prices have increased by 5.5%, up from 5.3% in July, largely driven by higher fish, fruit, and meat prices. Alcoholic beverages and tobacco experienced inflation of 7.2% on a year on year basis. Tobacco price increases have been driving inflation in this basket category for the most part in 2015. Alcoholic beverages and tobacco inflation was the second biggest contributor to overall monthly price increases as depicted in the above figure.

Clothing and footwear prices grew 0.3% year on year and fell 1.4% month on month. As this basket category maintains only a 3% weighting within the total basket it does not present a major drag on the overall inflation figure. Year on year inflation on housing, water, electricity, gas and other fuels increased marginally, posting a figure of 2.4% for August versus 2.1% in July. This was largely due to water supply, sewage services and refuse collection inflation recovering to 9.7% after an uncharacteristic fall to 5.4% in July. Once again rental payments for dwellings (both owners and renters) have experienced inflation of only 1.5% on a year on year basis, and have not increased on a month on month basis. This basket category was however the largest contributor to overall monthly inflation, largely due to its heavy weighting in the basket and not the magnitude of price increases in the category.

Transport costs were the third largest contributor to monthly cost increases as prices rose 0.3% during August. On a year on year basis transport costs were still down 1.4%, driven by lower fuel prices. A weak rand as well as volatile oil prices could lead to fluctuations in this basket category for a while to come still.

We continue to expect inflation to pick up towards year end as the full benefit of cheap oil is reach and the weak currency causes 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, as well as housing costs. At present Namibian inflation remains well below that of South Africa as has been the case for most of the year.

The Namibian annual inflation rate rose to 3.3% in July, up from 3.0% in June. On a month on month basis prices rose by 0.4% compared to 0.3% in June, largely due to a month on month increase in transport costs. On a year on year basis half the basket categories grew at a faster rate than in June while the other half slowed further. Year on year inflation is still well below average at this stage, largely due to a drop in the price of oil over the past year, and the knock on effects this has on input prices, as well as the heaviest weighted basket item (housing, water and electricity, gas and other fuels) experiencing prolonged inflation of well below the basket average. 12-Month average inflation reached a new low of 4.1%, and has been coming down steadily since November 2014.

On a year on year basis, food and non-alcoholic beverages prices have increased by 5.3%, up from 4.1% in June, largely due to a pickup in the rate of inflation of fish, bread and cereal, non-alcoholic beverages, mineral water, and juice prices. The effects of lower input costs due to depressed fuel prices are still flowing through to food prices. This is not likely to persist for long as poor rainfall in Namibia and South Africa, should see prices rebound the end of the year.

Year on year alcoholic beverages and tobacco price inflation slowed to 6.9% versus 7.2% in June. Tobacco price inflation slowed while alcoholic beverage prices increased at a slightly faster rate than during the previous month. Clothing and footwear inflation slowed on a year on year basis while prices have come down marginally since June. Year on year inflation on housing, water, electricity, gas and other fuels continued to slow, posting a July figure of 2.1% versus 2.5% in June. This was largely due to water supply, sewage services and refuse collection inflation slowing on a year on year basis due to base effects. Rental payments for dwellings (both owners and renters) have increased by only 1.5% on a year on year basis, and have not increased on a month on month basis.

The largest contributor to monthly inflation was the increase in transport costs which was driven by an increase in fuel prices. We feel that oil prices will continue to fluctuate for some time to come but that fuel price changes will continue to be smoothed by the Ministry of Mines and Energy and hence occur relatively infrequently.

As expected inflation picked up slightly during July while still at well below average levels. We feel that increases in the rate of inflation will continue going forward, although at a sedate pace. Cost push factors such as the depreciating currency, poor rainfall, and electricity generation issues within the region, all pointing to higher future prices.

The Namibian annual inflation rate remained unchanged at 3.0% in July. On a month on month basis, the inflation rate eased to 0.3%, as a result of slowing price increases in of food and non-alcoholic beverages as well as clothing and footwear. An equal number of CPI basket categories experienced increases and decreases in the rate of inflation on an annual basis.

On a year on year basis, food prices have increased by 4.1%, down from 4.5% in May, due partly to an elevated base. The effects of lower input costs due to depressed fuel prices are still flowing through to food prices. This is not likely to persist for long as poor rainfall in Namibia and South Africa, coupled with fuel price increases, should see prices start to increase again in the latter half of the year.

The alcoholic beverages and tobacco category continues to see prices rise at a more rapid rate than most of the basket categories, with twelve month average inflation picking up steam during the first half of the year. Prices increased 7.2% y/y during June, more or less in line with the rate recorded in May. The inflation rate was once again the single biggest contributor to the overall rise in prices experienced during the month.

Transport and fuel prices increased 0.6% on a monthly basis, although prices are still down on an annual basis. An increase in prices was largely expected due to the increase in oil prices and the modest increase in fuel prices that followed. The normalization of oil prices at current levels should mean that fuel prices will remain relatively stable at, or near current levels.

Inflation for June came in roughly in line with our expectations but we feel that inflation will start to pick up through the remainder of the year. However, low levels of inflation in housing and utilities as well as deflation in transport prices on an annual basis should contribute to below trend levels of inflation for some months to come, and result in below average annual inflation. In the longer term, however, a pickup in annual rates is inevitable due to cost push factors such as the depreciating currency, poor rainfall, and electricity generation issues within the region, all pointing to higher future prices.