Food & non-alcoholic beverages, the second largest basket item by weighting, continued to be the largest contributor to annual inflation, accounting for 1.2 percentage points of the total 3.9% inflation rate. Prices in this category increased by 0.4% m/m and 5.9% y/y. Prices in eleven of the sub-categories recorded price increases on an annual basis, while warm beverage prices fell 0.5% y/y and non-alcoholic beverage prices remained unchanged. The largest increases were observed in the prices of meat which increased by 15.83% y/y, fruit which rose by 10.55% y/y and oils and fats, which increased by 7.50% y/y.
The alcoholic beverages and tobacco basket item was the second largest contributor to the annual inflation rate in April, with prices increasing by 4.2% y/y. On a monthly basis, prices in this basket item rose by 0.4%. The alcoholic beverages sub-category recorded a price increase of 0.3% m/m and 3.3% y/y. Tobacco prices rose 1.1% m/m, and 8.3% y/y.
The housing and utilities, transport, and miscellaneous categories each accounted for 0.30 percentage points of the total annual inflation rate in April. Price inflation for housing and utilities remained steady on a monthly basis but rose 1.3% y/y. The regular maintenance and repair of dwellings subcategory recorded an increase in prices of 6.8% y/y. Prices in the electricity, gas and other fuels subcategory rose 0.9% y/y, while the annual inflation for rental payments stood at 1.3% y/y. Transport prices rose 1.2% m/m and 7.5% y/y, which was driven by the operation of personal transport equipment, which rose 1.9% m/m and 8.1% y/y, the increase resulting from a low fuel price base a year ago. Prices in the miscellaneous category rose 0.4% m/m and 6.6% y/y.
The rising inflation rate is to be expected as, the measurement period includes a low base, due to the lockdown restrictions that constrained economic activity a year ago and Namibia is in now a recovery phase of the business cycle as it emerges from a trough. IJG’s inflation model forecasts an average inflation rate of 3.6% y/y in both 2021 and 2022, indicating moderate inflation over the next two years. Seeing as inflation seems to be relatively contained and expectations for economic growth are also relatively low, we expect the central banks to remain reluctant to intervene with tighter monetary policies such as hiking interest rates. The South African Reserve Bank’s Monetary Policy Committee will meet this week and the South African repo rate is expected to remain steady at 3.5%.
