The Namibian annual inflation rate slowed to 1.6% in April, from 2.4% y/y in March. This is the lowest annual increase in inflation since June 2005. On a month-on-month basis, prices decreased by 0.3%, following the 0.1% m/m increase in March. Overall, prices in four of the basket categories rose at a faster annual rate than during the preceding, while eight rose at a slower rate. Prices for goods 2.2% y/y in April, while prices for services grew by 0.9%.
The food & non-alcoholic beverages category displayed price increases of 1.1% m/m and 4.2% y/y in April, making it the largest contributor to annual inflation, accounting for 0.78 percentage points of the 1.6% annual inflation rate. Prices in all thirteen sub-categories recorded increases on a year-on-year basis, with the largest increases being observed in the prices of fruits, vegetables and coffee, tea and cocoa.
The miscellaneous goods & services basket item was the second largest contributor to annual inflation, accounting for 0.3 percentage points of the total 1.6% annual inflation figure. The fact that the sixth largest basket item was one of the largest contributors to the annual inflation figure in April illustrates how low inflationary pressure is at the moment. The prices of miscellaneous goods & services rose by 0.3% m/m and 6.0% y/y in April. The only subcategories which showed increases on a month-on-month basis were personal care, which increased by 1.0% m/m, and personal effects, which increased by 0.1% m/m. Prices in all other subcategories remained steady during the month.
The education basket item recorded inflation of 7.0% y/y, with the cost of pre-primary education growing at a rate of 5.6% y/y. Primary and secondary education recorded price increases of 9.3% y/y, while tertiary education prices rose by 5.3%. None of the three subcategories printed price increases on a month-on-month basis.
Zonal data shows that, on a monthly basis, prices declined by 0.4% in the northern and central zones while falling by 0.1% in the mixed east, south and western zone. On an annual basis the Windhoek and surrounding area, in zone 2 recorded the lowest inflation rate at 0.8% y/y in April, with the northern region recording the highest rate of annual inflation at 2.1%. Inflation in zone 3 (Eastern, Southern and Western regions) slowed to 2.2% y/y.
Namibian annual inflation at 1.6% in April shows that inflationary pressure remains extremely subdued, and is currently at levels last seen in 2005. As explained last month, the lockdown imposed by the government severely hampered economic activity in April, putting both businesses and consumers under severe financial pressure which results in consumers simply not being able to afford higher prices on goods and services. While the lockdown has now been mostly lifted, we expect inflation to remain subdued in the short to medium term. IJG’s inflation model forecasts an average inflation rate of 1.9% y/y in 2020 and 3.7% y/y in 2021.
