Category Archives: Economic Research

The Namibian annual inflation rate remained unchanged at 6.7% in June. On a month on month basis, NCPI continued to rise, up 0.3% after the 0.5% uptick seen last month. On a year on year basis, four of the twelve basket categories saw price growth at a higher rate in June than was the case in May, which were offset by slower growth in prices in the remaining categories. The biggest contributor to inflation on an annual basis was food and alcoholic beverages, followed by housing.

On a month on month basis, prices in the food and non-alcoholic beverages basket category contracted 0.6%, well down from an increase of 1.4% recorded in the preceding month. Although price levels went down in the overall food and non-alcoholic beverages category on a month on month basis in June, several subcategories such as fish, sugar, jam, honey, syrups, chocolate and confectionery did record an uptick in prices. On a year on year basis, however, inflation in this category rose to 11.3%, compared to 4.1% a year earlier.

Transport, as the third largest basket category by weight, made the largest contribution to monthly inflation, followed by alcoholic beverages and tobacco. On a year on year basis, the largest contributors to overall inflation were housing, water, electricity, gas and other fuels and food and non-alcoholic beverages, largely due to their relatively large weighting in the basket, coupled with their relatively high inflation.

The annual inflation rate for the category housing, water, electricity, gas and other fuels stood at 7.6% in June, up 5.1 percentage points from the inflation rate in the comparable period of last year. On a monthly basis, the category has seen price increases of 0.1%. Price increases in this basket category have been driven by increasing rental prices, while going forward we expert increasing utility prices to drive further inflation in this category. Examples of this include water, electricity and municipal rates and taxes. Price increases for rentals and other dwellings have been extremely low for a number of years, as reported by the National Statistics Agency (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.

Alcoholic beverages and tobacco, as the fourth largest basket category saw a slight decrease in annual inflation of 0.1 percentage points, from 7.2% recorded in June last year. On a month on month basis, prices in this category increased at the same pace as last month, at 0.6%. 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 categories.

Emerging market economies have seen an inflow of funds over the past few weeks, driven by changes in interest rate expectations in advanced economies following the Brexit vote. In particular, South Africa has seen all-time record fund inflows into both equities and bonds, causing the exchange rate to strengthen and the inflation outlook to improve. As a result, we could see inflation levels coming down in the next few months in South Africa and Namibia, as rand strength is passed through to consumers, particularly on imported products. However, the relentless drought currently affecting the region might still drive increases in food prices, while housing utilities inflation in the coming months is also likely to remain high, as large administered price increases have been granted to bulk service providers. The inflation level in Namibia is still above that of South Africa, a situation that we regard as an accurate when one looks as the actual price pressures experienced by the residents of Namibia vis-a-vis those of South Africa.