Executive Summary
- In January 2024, the annual inflation rate declined to 5.4%, compared to the 7.0% recorded in January 2023, on a monthly basis inflation slightly increased compared to the 5.3% recorded in December 2023 (Figure 1)
- Between January 2023 and January 2024, the lowest monthly inflation rate occurred in December 2023
- The main contributors to the decline in annual inflation were food and non-alcoholic beverages, transport, and miscellaneous goods and services (Figure 2)
- On a monthly basis, price levels in Namibia increased by 1.3%, compared to a deflation of 0.1% recorded during the previous month
Analysis
- Food and non-alcoholic beverages, which account for 16.5% of the inflation basket, recorded an annual inflation rate of 6.5% during January 2024, compared to 14.0% recorded in January 2023. This marks a slower increase compared to the 22.3% witnessed during the same month in the previous year. The slow increase in the annual inflation rate of this subcategory was mainly observed in the price levels of maize meal/grain (from 37.2% to -7.5%); bread, cake flour (27.1% to -1.7%); macaroni, spaghetti, and noodles (18.9% to 0.3%); mealie rice/malt (from 19.2% to 2.6%); and bread (from 19.2% to 5.5%)
- The transport category, which accounts for 14.3% of the inflation basket, recorded an annual change of 6.1% during January 2024, compared to the 11.1% recorded in January 2023. The slower increase in the annual inflation rate for this component was reflected mainly in the operation of personal transport equipment from (15.9% to 6.7%) specifically parking fees and the prices of fuel
- Miscellaneous goods and services, accounting for 5.39% of the consumer basket, recorded an annual change of 4.1% during January 2024, compared to the 7.2% recorded in January 2023. This was driven by a decline in demand for insurance services which declined to 4% compared to 15.9% recorded in January 2023
- Core inflation stood at 4.9%, while headline inflation accelerated to 5.4% from December’s 5.3%, translating into a 0.5% difference between core and headline inflation (See Figure 1)
Figure 1: Annual Inflation Rate, Namibia (January 2023 – January 2024)
Source: NSA & HEI Research
Figure 2: Sub-Categorical analysis (%) change Year on Year (January 2023 – January 2024)
Source: NSA & HEI Research
Outlook
The decline in the annual inflation rate indicates a somewhat volatile trajectory, suggesting that while there has been a reduction in inflation, it remains subject to fluctuation. We anticipate that the trend of weakening inflation will continue. However, uncertainties and external factors such as fluctuations in oil prices and the global demand for commodities could contribute to fluctuations in inflation rates throughout the year, necessitating close monitoring and adaptability in response to changing economic conditions.
Executive Summary
- In December 2023, the annual inflation rate slowed to 5.3%, compared to the 6.9% recorded in December 2022 and the 5.7% recorded in November 2023 (Figure 1)
- The average annual inflation rate from January to December 2023 was estimated at 5.9%
- The main contributors to the decline in annual inflation were transport, furnishings, household equipment, and routine maintenance of houses, hotels, cafes, and restaurants as well as food and non-alcoholic beverages (Figure 2)
- On a monthly basis, the inflation rate slowed to 0.1%, compared to the 0.3% recorded in November 2023 while core inflation increased to 5.0%
Analysis
- The largest changes in annual prices in December 2023 were recreation and culture at 10.0%, and alcoholic beverages and tobacco at 8.4%
- The transport category, which accounts for 14.3% of the inflation basket, recorded an annual change of 4.0% during December 2023, compared to the 14.8% recorded in December 2022. The slow increase in the annual inflation rate for this component was reflected mainly in the lower prices for fuel
- The annual inflation rate for furnishings, household equipment, and routine maintenance of the house which accounts for 5.5% of the consumer basket registered a decline in the annual inflation rate of 5.1% in December 2023 compared to 10.6% recorded in December 2022. This was attributed to a decline in the price levels of goods and services for routine household maintenance which declined to 3.9% compared to 25.8% recorded in December 2022
- Hotels, cafes, and restaurants account for 1.4% of the consumer basket recorded a decline in the annual inflation rate of 6.5% in December 2023 compared to 11.7% recorded in December 2022. This was driven by a decline in demand for accommodation services which declined to 9.4% compared to 20.4% recorded in December 2022
- Core inflation stood at 5.0%, while headline inflation slowed to 5.3% from November’s 5.7%, translating into a 0.3% difference between core and headline inflation.
The gap between core and headline inflation is a concern for long-term inflation trends. A growing difference may indicate the need for proactive measures to control inflation. (See Figure 1)
Figure 1: Annual Inflation Rate, Namibia (December 2022 – December 2023)
Source: NSA & HEI Research
Figure 2: Sub-Categorical analysis (%) change Year on Year (December 2022 – December 2023)
Source: NSA & HEI Research
Outlook
The rate of headline inflation slowed down, decreasing from 9.2% in 2022 to 5.9% in 2023. We expect the ongoing pattern of decreasing inflation to persist into 2024.