Category Archives: Economic Research

Economic Research

NCPI – February 2021

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The Namibian annual inflation rate remained at 2.7% y/y in February, with prices in the overall NCPI basket increasing by 0.4% m/m. On a year-on-year basis, overall prices in six of the twelve basket categories rose at a quicker rate in February than in January and the other half of the basket categories recording slower rates of inflation. Prices for goods increased by 3.2% y/y while prices for services rose 2.0% y/y.

Food & non-alcoholic beverages, the second largest basket item by weighting, continued to be the largest contributor to annual inflation, accounting for 1.0 percentage point of the total 2.7% inflation rate. Prices in this category increased by 1.2% m/m and 5.5% y/y. Prices in twelve of the thirteen sub-categories recorded increases on an annual basis. The largest increases were observed in the prices of fruits which increased by 11.85% y/y and meat which increased by 11.84% y/y. The fish sub-category meanwhile saw a marginal price decrease of 0.6% y/y in February.

The alcoholic beverages and tobacco basket item was the second largest contributor to the annual inflation rate in February, with prices of the basket item increasing by 4.2% y/y. On a monthly basis, prices in this basket item fell by 0.4%. The alcoholic beverages sub-category recorded a price decrease of 0.4% m/m, but an increase of 3.0% y/y. Tobacco prices were down 0.2% m/m, but up 9.7% y/y.

The housing and utilities category accounted for 0.39 percentage points of the total annual inflation rate in February. Price inflation for this category remained steady on a monthly basis, but rose 1.5% y/y. The regular maintenance and repair of dwellings subcategory recorded an increase in prices of 3.1% y/y, which is a lower rate of increase than the 4.2% y/y registered the previous month. Prices in the electricity, gas and other fuels subcategory increased by 2.2% y/y, while the annual inflation for rental payments rose to 1.3% y/y. None of the four subcategories printed price increases on a month-on-month basis.

In the US inflation expectations have been heightened by the Fed’s prolonged loose monetary policy and President Joe Biden’s US$1.9 trillion stimulus package. These rising inflation expectations are putting pressure on central banks as they seek to ensure a smooth recovery.

On the local front, however, IJG’s inflation model forecasts an average inflation rate of 3.2% y/y in 2021 and 4.3% in 2022, indicating a gradual increase in the inflation rate over the next two years and that inflation will likely remain relatively low over this period. This, coupled with high unemployment and struggling economic growth in both Namibia and South Africa, means that we currently see it as unlikely that interest rates will be raised in either country in the short-term.

New Vehicle Sales – February 2021

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897 New vehicles were sold in February, an increase of 28.4% m/m from the 694 vehicles sold in January, and a 11.7% y/y increase from the 798 sold in February 2020. For the first two months of 2021 1,585 new vehicles have been sold, of which 764 were passenger vehicles, 703 light commercial vehicles, and 118 medium and heavy commercial vehicles. By comparison, the first two months of 2020 saw 1,470 new vehicles sold. 2021 is thus off to a slightly better start compared to last year. On a twelve-month cumulative basis, a total of 7,729 new vehicles were sold as at February 2021, representing a contraction of 26.0% from the 10,442 sold over the comparable period a year ago.

A total of 409 new passenger vehicles were sold during February, increasing by 15.2% from the 355 passenger vehicles sold in January. On a year-on-year basis, February new passenger vehicle sales 18.2% higher than the 346 vehicles sold a year ago. Year-to-date, passenger vehicle sales rose to 764, 19.6% higher than during the same period in 2020. On a rolling 12-month basis, passenger vehicle sales rose to 3,338, its highest level since April 2020. After three consecutive months of increases in this measure, early signs do seem to indicate as if the trough has been reached in the new passenger vehicle market.

A total of 482 new commercial vehicles were sold in February, representing an increase of 42.2% m/m and 6.6% y/y. 402 Light commercial vehicles, 13 medium commercial vehicles, and 67 heavy and extra heavy commercial vehicles were sold during the month. Light commercial vehicle sales rose 4.1% y/y, medium commercial vehicle sales dropped 38.1% y/y and heavy commercial vehicle sales increased by 48.9% y/y. On a twelve-month cumulative basis, light commercial vehicle sales have declined by 25.5% y/y, medium commercial vehicles fell by 41.8% y/y, and heavy commercial vehicles dropped 24.9% y/y.

Volkswagen enjoys a strong lead in the passenger vehicle sales segment with 40.3% of the segment sales year-to-date, followed by Toyota with 21.6% of the market share. The two top brands maintained their large gap over the rest of the market with Kia and Mercedes following with 6.0% and 5.5% of the market, respectively, leaving the remaining 26.6% of the market to other brands.

On a year-to-date basis, Toyota remained the leader in the light commercial vehicle space with a 51.5% market share, with Nissan in second place with a 14.9% market share. Ford and Isuzu claimed 12.7% and 6.5%, respectively, of the number of light commercial vehicles sold thus far in 2021. Hino leads the medium commercial vehicle segment with 27.3% of sales year-to-date, while Scania was number one in the heavy and extra-heavy commercial vehicle segment with 33.3% of the market share year-to-date.

The Bottom Line

February’s new vehicle sales figure of 891 was the highest number since October 2019, when 971 new vehicles were sold. The rolling 12-month number of new vehicle sales showed a small uptick for the second consecutive month to 7,729. The increase in new cumulative passenger vehicle sales is especially encouraging as it could indicate a slight increase in consumer confidence, although it is still early days. The growth in the last couple of months was likely driven by the extension of the payback period on vehicle financing from 54 months to 72 months in September 2020. . The growth is however from a very low base and overall 12-month cumulative sales is still down 66.4% from its peak in April 2015.