Category Archives: Economic Research

Economic Research

NCPI – February 2019

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The Namibian annual inflation rate moderated slightly to 4.4% y/y in February, following the 4.7% y/y increase in prices recorded in January. Prices in the overall NCPI basket decreased 0.1% m/m. On a year-on-year basis, overall prices in seven of the twelve basket categories rose at a quicker rate in February, while four categories recorded slower rates of inflation and one category posted steady inflation. Prices for goods increased by 4.3% y/y while prices for services increased by 4.6% y/y.

Food & non-alcoholic beverages, the second largest basket item by weighting, was once again the largest contributor to annual inflation, accounting for 1.0% of the 4.4% annual inflation rate. The basket category recorded price increases of 0.4% m/m and 5.9% y/y in February, versus the 1.7% m/m and 5.7% y/y increases recorded in January. Prices in all thirteen sub-categories recorded increases on a year-on-year basis with the largest increases being observed in the prices of vegetables, fruits, and bread and cereals.

Transport, the third largest basket item, was the second largest contributor to annual inflation. Prices for transport rose by 7.5% y/y in February, marginally faster than the increase of 7.3% y/y recorded in January. The purchase of vehicles subcategory saw price increases of 0.9% m/m and 5.0% y/y. The cost of operation of personal transport equipment recorded an increase of 5.2% y/y. Oil prices increased by 6.4% in February, reaching US$57 a barrel at the end of the month as OPEC cut its output to a nearly four-year low, according to a survey by S&P Global Platts. The Ministry of Mines and Energy however decided to keep fuel pump prices unchanged for the month.

Prices for the alcoholic beverages and tobacco category was the third highest contributor to the annual inflation rate in February, and increased at a rate of 0.3% m/m and 6.2% y/y. Prices of alcoholic beverages increased at a rate of 6.5% y/y while tobacco prices increased at a rate of 4.9% y/y.

The Namibian annual inflation rate of 4.4% is currently trending somewhat higher than neighbouring South Africa’s January figure (latest available release) of 4.0%. Namibia’s inflation was mainly driven by food inflation, as the second-round effects caused by increases in transport inflation towards the end of last year and poor rainfall throughout the country during the first half of the 2019 rainfall season continue to push up food inflation.

Although the Ministry of Mines and Energy decided to keep fuel pump prices unchanged for March, we expect the Ministry to start hiking prices sometime in the coming months as oil prices have been picking up steadily since the beginning of the year. Inflation expectations will further be driven by exchange rates, with the rand having weakened since the beginning of February.

New Vehicle Sales – February 2019

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741 New vehicles were sold in February, an increase of 11.3% m/m from the 666 vehicles sold in January. This is however 27.7% lower than the 1,025 new vehicles sold in February 2018. Two months into 2019, 1,407 new vehicles have been sold of which 674 were passenger vehicles, 652 light commercial vehicles, and 81 medium and heavy commercial vehicles. The first two months of 2018 saw 1,876 new vehicles sold. On a twelve-month cumulative basis, a total of 11,437 new vehicles were sold as at February 2019 representing a contraction of 11.2% from the 12,873 sold over the comparable period a year ago.

A total of 344 new passenger vehicles were sold during February, increasing by 4.2% from the 330 passenger vehicles sold in January. On a year-on-year basis however, February new passenger vehicle sales were 31.6% lower than the 503 vehicles sold a year ago. Year-to-date, passenger vehicle sales rose to 674, reflecting lower annual sales than the preceding 8 years, and a 25.7% decline from February 2018. On a rolling 12-month basis, passenger vehicle sales are at their lowest level since January 2011, highlighting the severity of the slowdown in sales.

Commercial vehicle sales reflect a similar picture, declining by 24.4% year-to-date and 10.7% y/y on a rolling 12-month basis. A total of 397 new commercial vehicles were sold in February, representing an increase of 18.2% m/m, but a contraction of 23.9% y/y. 351 Light commercial vehicles, 14 medium commercial vehicles, and 32 heavy and extra heavy commercial vehicles were sold during the month. Light commercial vehicle sales have dropped 27.5% y/y, while medium commercial vehicle sales fell 26.3% y/y, and heavy and extra heavy sales rose 68.4% y/y. On a twelve-month cumulative basis, light commercial vehicle sales dropped 11.9% y/y, while medium commercial vehicle sales rose 10.1% y/y, and heavy commercial vehicle sales fell 2.9% y/y. This is the fifth consecutive month that medium commercial sales have showed positive growth on a twelve-month cumulative basis.

During February, Volkswagen overtook Toyota in terms of year-to-date market share of new passenger vehicles sold. Volkswagen claimed 30.7% of the market, followed closely by Toyota with 28.3% of the market. They were followed by Ford and Mercedes with 6.5% and 6.1% of the market respectively, while the rest of the passenger vehicle market was shared by several other competitors.

Toyota remained the leader in the light commercial vehicle space with a 68.4% market share, with Ford in second place with an 8.3% market share. Volkswagen and Isuzu claimed 6.6% and 4.4%, respectively, of the number of light commercial vehicles sold thus far in 2019. Hino leads the medium commercial vehicle segment with 35.7% of sales while Scania was number one in the heavy and extra-heavy commercial vehicle segment with 34.0% of the market share year-to-date.

The Bottom Line

New vehicle sales remained dismal in February as 12-month cumulative new vehicle sales have declined by 11.2% y/y to 11,437 at the end of February. While historical data indicates that new vehicle sales typically pick up somewhat in March, we are of the view that the increase in sales for the month will be small as both consumer and business confidence remain depressed and as such, the prospects for new vehicle sales remain dim in the short- to medium-term. Recent new vehicle sales figures suggest that vehicle owners are holding on to the vehicles they already own or purchasing second hand and imported vehicles.