Namibian annual inflation remained unchanged at 5.0 percent in November, while on a monthly basis it increased from 0.1 to 0.2 percent. The consumption categories experiencing the largest price increases over the past 12 months were education (8.1%), alcoholic beverages and tobacco (7.8%) and food (7.2%). Only one consumption category saw prices decline, namely communications, which saw prices decline 1.4 percent over the 12 month period.
On a weighted basis, largely due to their heavy weightings in the NCPI basket, over 75 percent of total inflation stemmed from food and non-alcoholic beverages, alcoholic beverages and tobacco, housing, water, electricity, gas and other fuels and transport.
On the back of above-trend growth in Namibia, we continue to see locally administered prices, particularly for services, experiencing above (weighted) average inflation. While annual NCPI (i.e. weighted average inflation) was 5.0 percent in November, a number of services were significantly higher, with some in excess of double this figure. These high inflation levels, being above average inflation, increase the average. Public transport saw the highest annual increase in prices of local administered prices, increasing by 11.0 percent, while electricity gas and other fuels increased by 10.5 percent. Many other services saw high-single-digit inflation, as illustrated in the table below. Strangely, and in contradiction to extensive but anecdotal evidence, rental inflation was well below average inflation over the past 12 months, at just 1.9 percent.
Nevertheless, official measures of service inflation remain below that of goods, at 3.7 and 5.9 percent, respectively.
As oil price declines are transmitted to consumers, we expect to see goods inflation falling, starting with transport prices (current to three months out), followed thereafter by food prices (six to 18 months out). Inflation for the year (2014) is expected to average 5.4 percent, marginally below initial expectations of 5.6 percent.