NCPI – February 2018

The Namibian annual inflation rate decreased slightly to 3.5% y/y in February following the 3.6% y/y increase in prices recorded in January. Prices increased by 0.1% m/m. On a year on year basis, overall prices in four of the twelve basket categories rose at a quicker rate in February, while five categories recorded slower rates of inflation and three categories remained unchanged. Prices for goods increased by 2.9% y/y while prices for services increased by 4.4% y/y, with both rates unchanged from January.

The largest contributor to annual inflation remains housing and utilities due to its large weighting in the basket. The category posted inflation of 3.2% y/y, which is marginally lower than the 3.6% y/y increase in prices in January. The main cause for this slightly slower increase was the electricity, gas and other fuels subcategory which recorded a lower rate of inflation of 5.7% compared to the 8.5% registered in January. On a m/m basis, prices in this subcategory contracted by 1.2%. The rental payments for dwellings subcategory remained unchanged m/m, while the regular maintenance and repair of dwellings increased 0.6% m/m.

Transport, serving as the third largest basket category with a weighting of about 14%, accounted for 0.8% of annual inflation in February. Transport prices increased by 6.6% y/y and 0.6% m/m. The purchase of vehicles subcategory saw price increases of 8.2% y/y and an increase of 2.0% m/m. The cost of operation of personal transport equipment saw an increase of 7.3% y/y. Oil prices have dropped 4.7% during February reaching US$65 a barrel at the end of the month. As a result, the Ministry of Mines and Energy confirmed that fuel pump prices for February would remain unchanged for a third consecutive month.

Alcoholic beverages and tobacco prices rose by 4.4% y/y and 0.5% y/y. Alcohol prices remain the driver of the increase in this basket category which increased by 4.8% y/y and 0.6% m/m. Tobacco prices increased at a slightly slower rate at 2.9% y/y.

Namibian annual inflation of 3.5% y/y for February remains below that of South Africa. South African inflation has remained well confined within the SARB’s target band and will most likely report February data still within that range. If the currency remains strong and stable, inflation could come down further in the coming months. The rand could be volatile should the ratings agency Moody’s announce a downgrade in South Africa’s sovereign debt on 23 March.

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