Category Archives: Economic Research

Economic Research

NCPI June 2022

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Namibia’s annual inflation rate rose to 6.0% y/y in June, following the 5.4% y/y increase in prices recorded in May. June’s CPI print was the highest since June 2017. Prices in the overall NCPI basket rose by 1.0% m/m. On a year-on-year basis, overall prices in ten of the twelve basket categories rose at a quicker rate in June than in May, one recorded a slower rate and one remained steady. Prices for goods increased by 8.7% y/y, the quickest increase in 13 years, while prices for services increased by 2.2% y/y.

Transport was unsurprisingly again the largest contributor to the annual inflation rate in June, contributing 2.7 percentage points to the annual inflation rate. The category recorded price increases of 4.1% m/m and 18.6% y/y. All three sub-categories in this basket recorded increases on a month-on-month basis with the operation of personal transport equipment sub-category recording the largest increase in prices of 6.4% m/m and 32.0% y/y on the back of the Ministry of Mines and Energy’s decision to increase fuel at the beginning of June. Petrol prices rose by 250 cents per litre and diesel increased by 150 cents per litre, resulting in fuel price inflation reaching 56.9% y/y in June. The purchase of vehicles sub-category recorded inflation of 0.6% m/m and 4.4% y/y. Prices of public transportation services rose 0.01% m/m, in line with last month’s rate, but fell 4.2% y/y. Transport inflation is expected to remain elevated over the short- to medium-term as July saw another fuel price increase by the Ministry of Mines and Energy and the temporary drop in fuel levies are expected to be reversed in August. Global crude oil prices have retreated somewhat from the highs recorded in June, but the weakness in the South African rand has offset some of this.

Food & non-alcoholic beverages was the second biggest contributor to the annual inflation rate in June, contributing 1.3 percentage points. Overall, prices in this basket item rose 0.7% m/m and 7.0% y/y. As seen in prior months, all thirteen sub-categories in this basket recorded price increases on an annual basis. The largest increases were recorded in the prices of oils and fats which rose by 26.2% y/y, followed by fruit, which recorded an increase of 18.1% y/y. According to the United Nations’ FAO Food Price Index, which measures the monthly change in international prices of a basket of food commodities, prices fell by 2.3% m/m in June but is still 23.1% higher than a year ago. This was a third consecutive decline, and could potentially lead to lower local food prices, should the international trend continue.

Alcohol & tobacco inflation quickened from 4.7% y/y in May to 5.8% y/y in June. On a month-on-month basis, prices in the basket rose by 1.4%. The prices of alcoholic beverages increased 1.7% m/m and 5.9% y/y while tobacco prices fell by 0.1% m/m but rose by 5.0% y/y.

Namibia’s annual inflation rate continues to trend above its 12-month average of 4.5%. Transport inflation alone accounted for nearly half (45%) of the inflation print in June with rising fuel prices driving most of the increase. Inflationary pressures are expected to remain high for the rest of the year. The low services inflation print points to subdued domestic economic activity and again indicates that inflation is very much supply side driven at present. South Africa’s inflation rate of 6.5% in May breached the SARB’s 3-6% target band for the first time since 2017 and will mean that we can expect to see further rate hikes by the SARB’s MPC. We expect the BoN to respond in kind to any rate decisions taken by the SARB. IJG’s inflation model currently forecasts inflation to average between 5.9% and 6.3% in 2022.

New Vehicle Sales – June 2022

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866 new vehicles were sold in June, which is 96 more than were sold in May and represents a 2.7% y/y increase from the 843 vehicles sold in June 2021. The first half of 2022 has observed a total of 5,181 new vehicle sales, of which 2,668 were passenger vehicles, 2,175 light commercial vehicles, and 338 medium and heavy commercial vehicles. By comparison, the first half of 2021 saw 4,893 new vehicles sold. On a twelve-month cumulative basis, a total of 9,716 new vehicles were sold at the end of June, representing an 8.1% y/y increase from the 8,989 sold over the comparable period a year ago.

A total of 427 new passenger vehicles were sold during June, an increase of 5.4% m/m from the 405 sold in May, but a 0.7% y/y decrease from the 430 vehicles sold in June 2021. On a 12-month cumulative basis, new passenger vehicle sales have increased by 23.2% y/y to 4,875. Year-to-date, new passenger vehicles sales exceeded 2020 and 2021 levels, with 2,668 new passenger vehicles sold so far this year, a 74.5% and 17.2% increase from the new passenger vehicles sold over the same period in 2020 and 2021, respectively.

A total of 439 new commercial vehicles were sold in June, representing an increase of 20.3% m/m and 6.3% y/y. While all three subcategories recorded better sales than in May, the month-on-month increase was primarily driven by a rebound in light commercial vehicle sales of 21.4% m/m. There was a noticeably drop in Toyota’s light commercial vehicle sales in both May and June following the temporary closure of the production plant in KwaZulu-Natal. Despite this, light commercial vehicle sales were still in line with the monthly average for the year as customers switched to other brands who were able to deliver new light commercial vehicles. Medium- and heavy commercial vehicle sales fell 31.6% y/y and 19.0% y/y respectively, while light commercial vehicles sales rose 13.3% y/y. On a twelve-month cumulative basis, light commercial vehicles sales fell by 4.3% y/y to 4,135, medium commercial vehicles fell by 6.3% y/y to 178, while heavy commercial vehicles increased by 1.5% y/y to 528.

Toyota continues to lead the new passenger vehicle sales segment with 31.7% of the segment sales year-to-date, followed by Volkswagen with 20.4% of the market share. The two top brands maintained their large gap over the rest of the market with Kia and Suzuki following with 9.0% and 7.8% of the market, respectively, leaving the remaining 31.0% of the market to other brands.

On a year-to-date basis, Toyota maintained its dominance in the light commercial vehicle space with a 48.8% market share, followed by Nissan with 13.6% of the market. Hino continues to lead the medium commercial vehicle segment with 29.3% of sales year-to-date, closely followed by Mercedes-Benz with 24.0% of the market share. Scania remained the leader in the heavy and extra-heavy commercial vehicle segment with 33.1% of the market share year-to-date.

The Bottom Line

In context, June’s new vehicle sales figure was in line with the monthly average for the year. On a 12-month cumulative basis, new passenger vehicle sales have rebounded to the pre-pandemic levels seen in 2019 but seems unlikely to exceed it meaningfully in the short-term. New commercial vehicle sales continue to hover around the 4,800 level on a 12-month cumulative basis, where it has been for the past two years now, indicating stagnant demand in this sector. The last time cumulative commercial vehicle sales were at these levels was in 2006.