Executive Summary
- The annual inflation rate for April 2023 increased to 6.1%, up from 5.6% recorded in April 2022. (Figure 1)
- The highest changes in the annual inflation rate were mainly observed in the categories of food and non-alcoholic beverages (13.5%); recreation and culture (8.2%); miscellaneous goods and services (7.5%) and alcoholic beverages and tobacco (6.7%). (Figure 2)
- On a monthly basis, Namibia recorded an inflation rate of 0.4% in April 2023 compared to 0.6% recorded in March 2023.
Analysis
- The decline in the monthly inflation rate by 0.2% was mainly influenced by a decline of 2.5% in the prices of the operation of personal transport equipment for the lubrication subcategory (oil or grease to an engine).
- Food and non-alcoholic beverages which accounts for 16.5% of the NCPI basket, registered a year-on-year inflation rate of 13.5% during the period under review, compared to 5.7% obtained during the corresponding period of 2022. This was mainly influenced by an increase in the prices of citrus fruits imported mainly from South Africa
- Recreation and culture recorded an increase in the annual inflation rate of 8.2% from 4.4%. This was driven by an increase in package holidays of 73.6% as a consequence of the school midterm break and public holidays in April
- The annual inflation rate for miscellaneous goods and services increased from 0.5% to 7.5%. This came as a result of an increase in the demand for insurance services
- The alcoholic beverages and tobacco category increased to 6.7% from 4.5% recorded during the same period last year. This was mainly influenced by the 7.6% increase in the prices of alcoholic beverages specifically an increase in the prices of white spirits
Figure 1: Annual Inflation Rate Namibia, (April 2022 – April 2023)
Source: NSA & HEI Research
Figure 2: Sub-Categorical analysis (%) change Year on Year(y-o-y) and Month on Month(m-o-m)
Source: NSA & HEI Research
Figure 3: South African Rand Performance against USD, GBP, and EUR (Jan 2021 – March 2023)
Source: NSA & HEI Research
Outlook
The announcement of an increase in the NamPower average bulk tariff by 8.97% for the period 2023/2024 by the Electricity Control Board (ECB) on the 12th of May 2023 will lead to an overall increase in inflation for the “housing, water, electricity, gas, and other fuels category” and hence an increase in overall inflation since the category contributes the highest to Namibia’s inflation basket.
With load shedding and production constraints experienced in South Africa, we expect food inflation to persist because the country remains a net importer of the majority of food products from South Africa.
Furthermore, the current depreciation of the South African Rand influences Namibian inflation in such a way that imports become more expensive, resulting in rising prices of imported goods. Import price increases will then contribute to domestic inflationary pressures. The uncertainty surrounding Rand’s stability and volatility will continue to put pressure on import prices. We anticipate overall inflation to persist in the short to medium term.