Category Archives: Economic Research

Economic Research

NCPI – June 2020

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The Namibian annual inflation rate remained at 2.1% in June, unchanged from May. On a month-on-month basis, prices increased by 0.2%, following the 0.4% m/m increase in May. Overall, prices in five of the twelve basket categories rose at a faster annual rate than during the preceding month, four at a slower rate and three grew at a steady pace. Price for goods rose by 2.5% y/y in June, while prices for services grew by 1.6% y/y.

The food & non-alcoholic beverages category displayed prices decreases of 0.3% m/m, but an increase of 4.7% y/y in June, making it the largest contributor to annual inflation, accounting for 0.84 percentage points of the total 2.1% annual inflation rate.  Prices in twelve of the thirteen sub-categories recorded increases on a year-on-year basis. The largest increases were observed in the prices of fruit which increased by 21.2% y/y and vegetables which increased by 11.7% y/y. The price of bread and cereals saw price decreases of 0.9% y/y.

The alcoholic beverages and tobacco basket item was the second largest contributor to the annual inflation rate in June, with prices of the basket item increasing by 1.4% m/m and 3.6% y/y. Prices for tobacco products decreased by 0.3% m/m, but increased 3.9% y/y. The prices of alcoholic beverages meanwhile rose by 1.8% m/m and 3.6% y/y.

The miscellaneous goods & services basket recorded inflation of 0.1% m/m and 6.3% y/y, and contributed 0.32 percentage points to the overall annual inflation figure. Only two subcategories showed price increases on a month-on-month basis, with personal effects increasing by 0.4% m/m and personal care rising by 0.2%. Prices in all the subcategories remained steady during the month.

The NSA’s regional CPI data shows that on a monthly basis prices increased by 0.2% in the northern zone 1, 0.2% in the central zone, and 0.1% in the mixed eastern, southern and western zone. On an annual basis the northern region recorded the highest inflation rate at 2.3% y/y in June, followed by the central zone at 2.1% y/y and the mixed zone 3 at 1.8% y/y.

Namibian annual inflation at 2.1% in June remains benign as economic activity remains weak after the relaxation of the lockdown restrictions, and is on par with South Africa’s May inflation figure of 2.1% y/y. South Africa’s inflation has breached the lower end of the SARB’s 3-6% target range in April, and remained at or below the 4.5% midpoint for 18 consecutive months. If the SARB expects inflation to trend at current levels for some time, it could decide to cut interest rates further. The market currently expects the SARB to cut rates by 25-50 basis points at its July MPC meeting next week, although a 25-basis point cut is more likely in IJG’s view. Regardless of the outcome, we expect the BoN to follow the SARB’s at its August MPC meeting, as Namibian inflation will likely remain muted for at least the rest of the year. IJG’s inflation model forecasts an average inflation rate of 2.2% y/y 2020 and 3.8% in 2021. The biggest risk to this forecast is fuel price increase due to the steady increase in the international oil price.

New Vehicle Sales – June 2020

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767 New vehicles were sold in June, an increase of 62.8% m/m from the 471 new vehicles sold in May. However, this is a decrease of 21.5% y/y from the 977 new vehicles sold in June 2019. Year-to-date 3,517 vehicles have been sold, of which 1,530 were passenger vehicles, 1,766 were light commercial vehicles, and 221 were medium and heavy commercial vehicles. On a rolling 12-month basis, a total of 8,595 new vehicles were sold as at June 2020, representing a contraction of 24.7% from the 11,412 sold over the comparable period a year ago.

345 New passenger vehicles were sold during June, increasing by 56.8% m/m, although this increase is from a low base. On a year-on-year basis, June’s new passenger vehicle sales were 8.7% lower than the 378 vehicles sold a year ago. Year-to-date passenger vehicle sales rose to 1,530 units, down 38.1% when compared to the number sold in the first half of last year. Twelve-month cumulative passenger vehicle sales fell 0.9% m/m and 27.3% y/y. Passenger vehicles have made up 43.5% of the total number of new vehicles sold in the first six months of 2020, compared to 46.4% in the same period last year.

A total of 422 new commercial vehicles were sold in June, representing a 68.1% m/m increase, but a 29.5% y/y contraction. The monthly increase is again from a low base. Of the 422 commercial vehicles sold in June, 386 were classified as light commercial vehicles, 12 as medium commercial vehicles and 24 as heavy or extra heavy commercial vehicles. On a twelve-month cumulative basis, light commercial vehicle sales dropped 24.6% y/y, while medium commercial vehicle sales rose 6.1% y/y, and heavy commercial vehicle sales fell by 13.7% y/y. While medium- and heavy commercial vehicles continue to record growth on a twelve-month cumulative basis, the light segment of the market continues to see lower volumes sold than in 2019.

Volkswagen narrowly leads the passenger vehicle sales segment with 30.4% of the segment sales year-to-date. Toyota retained second place with 29.5% of the market share as at the end of June. They were followed by Kia and Hyundai with 6.5% and 5.6% of the market respectively, while the rest of the passenger vehicle market was shared by several other competitors.

Toyota, with a strong market share of 56.4% year-to-date commands the light commercial vehicle sales segment. Nissan remains in the second position in the segment with 13.7% of the market, while Ford makes up third place with 10.3% of the year-to-date sales. Mercedes leads the medium commercial vehicle segment with 31.7% of sales year-to-date and remains number one in the heavy and extra-heavy commercial vehicle segment with 22.3% of the market share year-to-date.

The Bottom Line

June saw the number of new vehicles sales increasing quite substantially on a monthly basis. However, as pointed out earlier in this report, this increase is from a relatively low base as vehicle sales are merely recovering after very low activity during lockdown. In the first half of this year, new vehicle sales are down 33.9% y/y compared to the same period in 2019. We expect new vehicle sales to remain under pressure and do not foresee any substantial increases in the number sold for at least the rest of the year, as economic conditions are expected to remain weak.