Category Archives: Inflation

Namibia’s annual inflation rate remained steady at 7.1% y/y in October. On a month-on-month basis, prices in the overall NCPI basket rose 0.2% m/m. On an annual basis, overall prices in five of the twelve basket categories rose at a quicker rate in October than in September, five categories recorded a slower rate of inflation and two recorded inflation rates consistent with those in September. Prices for goods increased by 9.7% y/y, slightly slower than the 9.8% y/y increase reported last month. Prices for services increased by 3.4% y/y, the quickest annual rise since December 2019.

Transport remains the largest contributor to the annual inflation rate, contributing 2.6 percentage points to the annual inflation rate in October. On a month-on-month basis, prices in this basket item declined for a second consecutive month after falling by 0.7% m/m in October. The decline was somewhat expected given the 100c per litre drop in the petrol price that came into effect in early October, following an even larger reduction in overall fuel prices in the month prior. Prices in the operation of personal transport equipment sub-category declined by 1.3% m/m in October while on an annual basis inflation in this category slowed to 26.8% y/y from 30% y/y in September. We expect inflation for this sub-category to pick up again in November following the 198c per litter increase in the price of Diesel that came into effect earlier this month. Prices in the public transportation services sub-category climbed by 0.4% m/m and 6.8% y/y whilst prices in the purchase of vehicles sub-category rose by 0.1% m/m and 3.4% y/y. Overall, prices in the transport basket rose by 17.8% y/y in October.

Food & non-alcoholic beverages were the second biggest contributor to annual inflation, contributing 1.7 percentage points to October’s annual inflation print. Overall, prices in this basket item rose 0.7% m/m and 9.1% y/y. All thirteen sub-categories in this basket item recorded price increases on an annual basis for the 10^th consecutive month in October. Oils and fats again saw the largest price increase on an annual basis, rising 25.5% y/y, followed by fruit prices which rose by 21.6% y/y.

Alcohol & tobacco contributed 0.9 percentage points to October’s annual inflation print. Overall prices in the basket category rose by 0.4% m/m and 6.7% y/y, the quickest year-on-year increase since October 2017. The alcoholic beverages sub-category printed inflation of 0.6% m/m and 7.4% y/y, while the prices of tobacco products fell by 0.1% m/m but increase by 3.7% y/y.

Overall, the transport-, food- and alcohol and tobacco categories accounted for 73% of October’s inflation rate and remain the most influential drivers to Namibia’s inflation print, with the other 9 categories contributing the remaining 27%.

Namibia’s October annual inflation print at 7.1% continued to trend above the SARB’s target ceiling of 6.0% for the 4^th consecutive month. South Africa by comparison saw its CPI print slow for a second consecutive month in September, but at 7.5% remains notably above the upper limit of the SARB’s target range. We expect both the SARB and the Bank of Namibia (BoN) to maintain a hawkish monetary stance for as long as inflation remains elevated above the target range. November’s diesel price increase will certainly not assist in alleviating inflationary pressures in the short run and may prolong the BoN’s fight in bringing inflation back within acceptable levels. IJG’s inflation model currently forecasts Namibia’s annual inflation rate to stay elevated above the upper target limit for the remainder of 2022, and for it to end the year at around 6.6%. 

Namibia’s annual inflation rate slowed marginally to 7.1% y/y in September from 7.3% y/y in August. Prices in the overall NCPI basket rose by 0.1% m/m. On a year-on-year basis, overall prices in nine of the twelve basket categories rose at a quicker rate in September than in August, two recorded a slower rate of inflation and one recorded prices consistent with August. Prices for goods increased by 9.8% y/y, while prices for services increased by 3.3% y/y.

Predictably, the transport category was the largest contributor to the annual inflation rate in September, contributing 2.8 percentage points to the annual inflation rate. The category recorded a price decline of 1.6% m/m, but transport prices are still 19.5% higher than a year ago. Two of the three sub-categories recorded slower inflation on a month-on-month basis with the operation of personal transport equipment sub-category recording a decrease of 2.1% m/m, but an increase of 30.0% y/y, on the back of the Ministry of Mines and Energy’s decision to decrease fuel prices at the beginning of September. Petrol prices were cut by 120 cents per litre and diesel prices by 65 cents per litre. Petrol prices were cut by a further 100 cents per litre in the beginning of October, however given that most of the economy operates on diesel (which did not see a change in price this time round), we expect inflationary pressure to persist. The purchase of vehicles sub-category recorded a decrease in inflation of 0.9% m/m, but rose 3.2% y/y. Prices of public transportation services remained steady on a month-on-month basis, but rose 6.4% y/y.

Food & non-alcoholic beverages was the second biggest contributor to the annual inflation rate in September, contributing 1.7 percentage points. Overall, prices in this basket item rose 0.6% m/m and 9.3% y/y, the quickest year-on-year increase since February 2017. All thirteen sub-categories in this basket item recorded price increases on an annual basis. The largest increases were recorded in the prices of oils and fats which rose by 25.5% y/y, followed by fruit which recorded an increase of 20.4% y/y, mainly attributable to the increase in prices of avocados, citrus fruits, and dried fruits.

Alcohol & tobacco inflation quickened to 5.6% y/y in September, from the 5.2% y/y increase recorded in August. On a month-on-month basis, prices of the basket category rose by 0.8%. The prices of alcohol beverages rose by 0.7% m/m and 5.8% y/y, while the prices of tobacco products increased by 1.2% m/m and 4.5% y/y.

Namibia’s annual inflation rate of 7.1% in September followed three consecutive months of quicker inflation prints and was mainly attributable to the decrease in fuel prices. The transport-, food- and alcohol and tobacco categories remain the largest contributors to inflation, accounting for 75% of the Namibian inflation rate in September, with the remaining 9 categories contributing the other 25%. South Africa’s annual inflation rate has similarly slowed in August, but at 7.6% y/y continues to trend above the SARB’s 3-6% target band and means that we will see further rate hikes by the SARB’s MPC. We expect the Bank of Namibia to reciprocate to any decisions taken by the SARB. IJG’s inflation model currently forecasts Namibia’s annual inflation rate to remain elevated for the remainder of 2022, and for it to end the year at around 7.0%.

Namibia’s annual inflation rate ticked up to 7.3% y/y in August, following the 6.8% y/y increase in prices recorded in July. August’s annual CPI rate was the quickest increase since February 2017. On a month-on-month basis, prices in the overall NCPI basket rose 0.3% m/m. On an annual basis, overall prices in six of the twelve basket categories rose at a quicker rate in August than in July, three categories recorded slower rates of inflation and three categories recorded prices consistent with the prior month. Prices of goods increased by 10.2% y/y, while prices for services increased by 3.3% y/y in August.

Transport continues to be the largest contributor to the annual inflation rate, accounting for 3.3 percentage points of the total 7.3% y/y inflation rate in August. Prices in the transport category rose 0.2% m/m and 23.2% y/y, the quickest year-on-year increase in our database stretching back to 2003. The three subcategories in the transport basket items all recorded increases on a month-on-month and year-on-year basis. The operation of personal transport equipment subcategory, which recorded price increases of 0.2% m/m and 35.4% y/y, continues to fuel most of the inflation in this basket item, with global oil prices remaining elevated. The Ministry of Mines and Energy’s announcement at the beginning of September to cut petrol prices by 120 cents per litre and diesel prices by 65 cents per litre should ease inflation of the transport category somewhat going forward, although fuel prices remain considerably higher than they were last year. The purchase of vehicles subcategory recorded inflation of 0.5% m/m and 5.5% y/y. Prices of public transportation services rose were steady month-on-month but rose 6.4% y/y.

Food & non-alcoholic beverages, the second largest basket item by weighting, was the second largest contributor to the annual inflation rate in August, contributing 1.6 percentage points. Prices in this basket item rose by 0.8% m/m and 8.8% y/y, the quickest year-on-year increase since February 2017. As has been the case in the past seven months, all thirteen sub-categories recorded price increases on an annual basis. The biggest increases were observed in the prices of oils and fats which rose by 26.1% y/y, followed by fruit which recorded prices increases of 20.0% y/y.

Alcohol & tobacco inflation slowed from 5.4% y/y in July to 5.2% y/y August. On a monthly basis, prices in the basket item decreased by 0.3% m/m. The prices of alcoholic beverages decreased by 0.2% m/m but rose by 5.4% y/y, while tobacco prices fell by 0.9% m/m but rose by 4.5% y/y.

The annual inflation rate in Namibia continues to rise and as mentioned earlier, August’s rate was the quickest since February 2017. While the rate is high, it is by no means extraordinary for Namibia, as it has reached (and breached) the 7.0% level a couple of times over the past two decades. Unsurprisingly, transport and food prices remain the main drivers of the Namibian inflation rate, contributing 68% to the country’s annual rate in August. The fuel price cuts announced at the beginning of the month should ease inflation pressure somewhat, but risks remain to the upside. South Africa’s inflation rate of 7.8% y/y in July continues to trend above the SARB’s 3-6% target band and expectation are that its MPC will hike rates by between 50-75bps in September. The BoN will respond in kind to any decision taken by the SARB. IJG’s inflation model currently forecasts the annual inflation rate to remain elevated for the remainder of 2022, and for it to end the year at around 7.1%.