NCPI – May 2018

The Namibian annual inflation rate ticked up to 3.8% in May, following the 3.6% y/y increase in prices recorded in April. On a month-on-month basis, prices increased 0.4%. On a year-on-year basis, overall prices in six of the basket categories rose at a quicker rate in May than in April, with four categories recording slower rates of inflation and two categories remained unchanged. Prices for goods increased by 3.6% y/y while prices for services increased by 4.2% y/y.

Due to its large weighting in the basket, housing and utilities remains the largest contributor to annual inflation. Annual inflation for this category increased by 3.3% y/y and 0.3% m/m. The regular maintenance and repair of dwellings subcategory recorded an increase in prices of 2.6% y/y, which is a slower rate of increase than the 3.2% y/y registered the previous month. On a monthly basis, prices in this subcategory increased slightly by 0.7%. Prices in the electricity, gas and other fuels subcategory increased by 1.7% m/m and 5.5% y/y. The rest of the subcategories remained unchanged month-on-month and showed slightly slower price increases year-on-year.

Transport was the second largest contributor to annual inflation, accounting for 0.7% of the total 3.8% annual inflation figure. Prices for transport rose by 5.6% y/y in May, marginally slower than the increase of 5.8% y/y recorded in April. Prices related to the purchases of vehicles increased by 6.6% y/y in May compared to the 7.3% y/y increase recorded in the preceding month. The price of oil has retreated form the highs of May as Saudi Arabia and Russia signalled they may increase output later this year to offset potential supply losses from Iran and Venezuela.

Alcoholic beverages and tobacco, the third largest category, saw slightly faster inflation of 5.4% y/y and 0.7% m/m. Tobacco prices increased by 2.1% y/y, while alcohol prices increased by 6.2% y/y.

Namibian annual inflation at 3.8% y/y continues trending lower than that of South Africa. South Africa’s consumer inflation rate jumped to 4.5% in April after reaching a seven-year low of 3.8% in March. The SARB stated that risks and uncertainties that could possibly affect the inflation rate have shifted to the upside. Furthermore, the weakening rand may push inflation higher, decreasing the likelihood that either the SARB or BoN will cut interest rates again in 2018. BoN yesterday announced that the MPC decided to keep the repo rate unchanged and stated that inflation is expected to average around 4% in 2018.

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