The Namibian inflation rate rose to 5.6% in April, materially quicker than the 4.5% rate recorded in March. Prices in the overall NCPI basket rose by 1.4% m/m, the largest monthly increase since January 2018. On a year-on-year basis, overall prices in seven of the twelve basket categories rose at a quicker rate in April than in March, with two categories recording slower rates of inflation and three categories recorded prices consistent with the prior month. Prices for goods increased by 7.5% y/y while prices for services increased by 3.1% y/y in April.
Rather unsurprisingly, transport was the largest contributor to the annual inflation rate again in April, contributing 2.7 percentage points to the total 5.6% y/y inflation rate. Prices in this category rose by 5.7% m/m and 18.9% y/y. All three sub-categories in this basket item recorded higher inflation on both a monthly and annual basis. The Namibia Statistics Agency’s (NSA) data shows that transport prices were up 9.5% by the end of April. The operation of personal transport equipment sub-category recorded price increases of 8.8% m/m and 27.3% y/y, following the Ministry of Mines and Energy’s decision to increase petrol and diesel prices by 195- and 295 cents per litre, respectively, in April. Prices of public transportation services rose by 0.1% m/m and 9.8% y/y, in line with the rate recorded last month. The purchase of vehicles sub-category recorded inflation of 1.4% m/m and 5.2% y/y. The Ministry of Mines and Energy’s announcement at the beginning of May to temporarily lower several of the levies charged on fuel for the next three months was welcomed by consumers and businesses alike and should soften the inflationary impact of the high fuel prices to a certain extent.
Food & non-alcoholic beverages was the second biggest contributor to the annual inflation rate in April, contributing 1.1 percentage points. Prices in this basket item rose by 1.4% m/m and 5.7% y/y. As has been the case in the prior three months, all thirteen sub-categories recorded price increases on an annual basis. The largest increases were recorded in the prices of oils and fats which rose by 23.4% y/y, followed by fruit, which recorded prices increases of 13.8% y/y. The NSA’s data shows that consumers in the eastern, southern and western regions of the country paid the highest price for 750ml of pure sunflower oil at N$37.50, followed by the central region at N$32.60, while consumers in the northern parts of the country paid N$29.76.
Alcohol & Tobacco inflation accelerated from 4.1% y/y in March to 4.5% y/y in April and was the third-largest contributor to April’s annual inflation rate. On a monthly basis, prices in the basket item increased by 0.9% m/m. The prices of tobacco products rose by 3.3% m/m and 6.3% y/y, while the prices of alcoholic beverages increased by 0.3% m/m and 4.1% y/y.
Namibia’s annual inflation rate of 5.6% in April is the highest rate in the last 58 months. Rising food and transport prices remain the primary drivers of the Namibian inflation rate, contributing 67% to the country’s annual rate in April. The uptick in the rate in April means that the 1.4 percentage point differential between Namibia and South Africa’s inflation rates that have been in place since August last year is now significantly smaller. South Africa’s inflation rate came in just below the SARB’s upper end of the target band at 5.9% in March. With inflationary pressure expected to remain high, the SARB’s MPC is expected to hike rates by 25 bps at its May meeting, leaving the BoN with little choice but to follow in-kind in at its MPC meeting June. IJG inflation model currently forecasts inflation to average between 5.0% and 6.2% in 2022.
