Category: Inflation

Executive Summary

• In November 2023, the annual inflation rate slowed to 5.7%, compared to the 7.0% recorded in November 2022 and the 6.0% recorded in October 2023 (Figure 1).

• The main contributors to the decline in annual inflation were transport, furnishings, household equipment, and routine maintenance of houses, as well as hotels, cafes, and restaurants (Figure 2).

• On a monthly basis, the inflation rate slowed to 0.3%, compared to the 0.8% recorded in October 2023.Core inflation remained at 4.9% for the fourth consecutive month.

Analysis

• The largest changes in annual prices in November 2023 were Recreation and culture at 10.1%, Food and non-alcoholic beverages at 9.2%, Alcoholic beverages and tobacco at 8.0%, Hotels, cafes, and restaurants at 7.7%, Furnishings, household equipment, and routine maintenance of the house at 5.3%, and Miscellaneous goods and services at 5.2%.

• The transport category, which accounts for 14.3% of the inflation basket, recorded an annual change of 5.1% during November 2023, compared to the 18.3% recorded in November 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 the Housing, water, electricity, gas, and other fuels component, which accounts for 28.4% of the NCPI, registered an increase of 3.2% during November 2023, compared to the 2.4% witnessed in November 2022. On a monthly basis, the inflation rate stood at 0.0%, compared to 0.3% recorded during the previous month.

• The year-on-year inflation rate for Alcoholic beverages and tobacco registered an increase of 8.0% in November 2023, compared to the 4.8% registered in November 2022. The increase in the annual inflation rate for this category resulted from increases witnessed in both alcoholic beverages (from 5.0% in 2022 to 8.5%) and tobacco (from 4.1% in 2022 to 5.9%). Month-on-month, the inflation rate for this category increased to 0.5%, compared to 0.2% registered in October.

• Core inflation stood at 4.9%, while headline inflation slowed to 5.7% from October’s 6.0%, translating into a 0.8% difference between core and headline inflation. The disparity between core and headline inflation continues to raise concerns about long-term inflation trends, and a widening gap might signal a necessity for more proactive measures to combat inflation (See Figure 1).

Figure 1: Annual Inflation Rate, Namibia (November 2022 – November 2023)

Source: NSA & HEI Research

Figure 2: Sub-Categorical analysis (%) change Year on Year (November 2022 – November 2023)

Source: NSA & HEI Research

Outlook

This has been the first month of slowed inflation after witnessing an uptick in headline inflation in the second half of 2023, though it remains lower compared to the previous year. We expect inflation to continue this new trend for December 2023, both monthly and annually, due to lower fuel prices announced for December 2023.

Executive Summary

• In October 2023, the annual inflation rate stood at 6.0%, marking an increase compared to the 5.4 % recorded the previous month but a slowdown compared to the 7.1% of October 2022 (Figure 1)
• The main contributors to a decline in the annual inflation were: transport, furnishings, household equipment, and routine maintenance of the houses and hotels, cafes, and restaurants, (Figure 2)
• On a monthly basis, the inflation rate remained the same as that of the previous month at 0.8%. The 0.8% emanated from the categories of transport (from 2.9% to 3.5%), furnishings, household equipment, and routine maintenance of the houses and hotels (from 0.3% to 0.6%), and health (from 0.0% to 0.2%)

Analysis

• The transport category which accounts for 14.3% of the consumer basket registered a decline in the annual inflation rate of 6.6% in October 2023 compared to 17.8% recorded in October 2022. The decline in the annual inflation rate for this component was mainly attributed to decline in petrol and diesel prices which declined to 9.0% from 45.8% recorded in October 2022. However, on a monthly basis, petrol and diesel prices increased significantly from -3.3% to 9.0%
• 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 5.6% in October 2023 compared to 9.6% recorded in October 2022. This was attributed to a decline in the price levels of goods and services for routine household maintenance which declined to 4.2% compared to 24.8% recorded in October 2022
• Hotels, cafes, and restaurants account for 1.4% of the consumer basket recorded a decline in the annual inflation rate of 7.5% in October 2023 compared to 10.6% recorded in October 2022. This was driven by a decline in demand for accommodation services which declined to 9.5% compared to 18.8% recorded in October 2022
• Core inflation stood at 4.9% while headline inflation increased to 6.0% from the previous month's 5.4%, translating into a 1.1% difference between core and headline inflation.  The disparity between core and headline inflation continues to raise concerns about long-term inflation trends and a widening gap might signal a necessity for more proactive measures to combat inflation. (See Figure 1)

Figure 1: Annual Inflation Rate, Namibia (October 2022 – October 2023)

Source: NSA & HEI Research

Figure 2: Sub-Categorical analysis (%) change Year on Year (October 2022 – October 2023)

Source: NSA & HEI Research

Outlook

Following a declining trend observed since June 2023, headline inflation has now begun to increase on a monthly basis, though it still remains lower compared to the previous year. We expect inflation to decrease in November 2023, both monthly and annually, due to unchanged fuel prices for November 2023.

Executive Summary

• In September 2023, the annual inflation rate slowed to 5.4% compared to 7.1% in September 2022. (Figure 1)
• The main contributors to a decline in the annual inflation were: transport, furnishings, household equipment, and routine maintenance of the houses and hotels, cafes, and restaurants, (Figure 2)
• On a monthly basis, Namibia recorded an inflation rate of 0.8% an increase from 0.4% recorded for August 2023. The increase mainly emanated from the categories of transport (from 0.5 % to 2.9%), alcoholic beverages and tobacco (from 0.5% to 0.8%)

Analysis

• The transport category which accounts for 14.3% of the consumer basket registered a decline in the annual inflation rate of 2.2% in August 2023 compared to 19.5% recorded in August 2022. The decline in the annual inflation rate for this component was reflected mainly in the subcomponent of operation of personal transport equipment which declined to 0.1% compared to 30% recorded in September 2022 attributed to a 3.3% fall in petrol and diesel prices
• 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 5.5% in September 2023 compared to 9.4% recorded in September 2022. This was attributed to a decline in the price levels of goods and services for routine household maintenance which declined to 4.5% compared to 25.1% recorded in September 2022
• Hotels, cafes, and restaurants account for 1.4% of the consumer basket recorded a decline in the annual inflation rate of 6.9% in September 2023 compared to 11% recorded in September 2022. This was driven by a downturn in demand for accommodation services which declined to 7.6% compared to 20.4% recorded in September 2022.
• Core inflation stood at 4.9% in September 2023 unchanged from 4.9% recorded in August 2023 and headline inflation increased to 5.4% for September 2023 from 4.7% recorded the previous month. The gap between core and headline inflation could raise concerns about long-term inflation trends. If this gap widens, it may signal a need for more proactive inflation-fighting measures. Figure 1

Figure 1: Annual Inflation Rate, Namibia (September 2022 – September 2023)

Source: NSA & HEI Research

Figure 2: Sub-Categorical analysis (%) change Year on Year (September 2022 – September 2023)

Source: NSA & HEI Research

Outlook

The annual inflation for Namibia indicates a decreasing trend, driven by significant declines in specific categories such as transport and household expenses. The hospitality sector which is used as a proxy for the tourism sector also saw a reduction in inflation due to decreased demand for accommodation services. However, the gap between core and headline inflation raises concerns and calls for vigilant monitoring by the monetary and fiscal authorities to ensure price stability. We anticipate inflation to increase for the transport component due to higher Brent crude oil prices.

Executive Summary

• In August 2023, the annual inflation rate decelerated to 4.7% compared to 7.3% in August 2022. (Figure 1)
• The main contributors to a decrease in the annual inflation were: transport, furnishings, household equipment, and routine maintenance of the houses and hotels, cafes, and restaurants, (Figure 2)
• On a monthly basis, Namibia recorded an inflation rate of 0.4% an increase from 0.3% recorded for July 2023. The increase mainly emanated from the categories of hotels, cafes, and restaurants (from 0.1 % to 1.9%), food and non-alcoholic beverages (from -0.2% to 0.3%), and miscellaneous goods and services (from –0.3% to 0.3%).

Analysis

• The transport category which accounts for 14.3% of the consumer basket registered a decline in the annual inflation rate of 2.2% in August 2023 compared to 23.2% recorded in August 2022. The decline in the annual inflation rate for this component was reflected mainly in the subcomponent of operation of personal transport equipment which declined to 6.1% compared to 35.4% recorded in August 2022 attributed to a 13.1% fall in petrol and diesel prices
• 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 6.6% in August 2023 compared to 8.6% recorded in August 2022. This was attributed to a decline in the price levels of goods and services for routine household maintenance
• Hotels, cafes, and restaurants account for 1.4% of the consumer basket recorded a decline in the annual inflation rate of 7.8% in August 2023 compared to 9.3% recorded in August 2022. This was driven by a downturn in demand for accommodation services which declined to 9.2% compared to 16.5% recorded in August 2022.
• Core inflation increased compared to headline inflation between July and August 2023. Core inflation stood at 4.8% in August from 4.4% recorded in July 2023 and headline inflation increased from 4.5% for August to 4.7%. The slight gap between core and headline inflation could raise concerns about long-term inflation trends. If this gap widens, it may signal a need for more proactive inflation-fighting measures. Figure 1

Figure 1: Annual Core and Headline Inflation Rate, Namibia (August 2022 – August 2023)

Source: NSA & HEI Research

Figure 2: Sub-Categorical analysis (%) change Year on Year (August 2022 – August 2023)

Source: NSA & HEI Research

Outlook

Although the annual inflation rate has shown a deceleration compared to the previous year, recent months have witnessed some upward pressure on monthly inflation. This overall decline in annual inflation can be attributed to a significant drop in inflation within categories such as transportation, furnishings, household equipment, and routine home maintenance.

However, the main current inflation risk stems from the increasing Brent crude oil prices due to growing expectations of a limited oil supply, combined with the strength of the US dollar. We anticipate that monthly inflation specifically for the transport category will increase for September 2023 due to recent diesel price hikes, which were announced by the Ministry of Mines and Energy and took effect on September 6, 2023.

Analysis

The increase in petrol and diesel prices by the Ministry of Mines and Energy for September 2023 was a response to the complex interplay of global oil market dynamics. Brent oil rallied to $90 a barrel for the first time since November as key OPEC+ producers extended supply cuts that have tightened the crude market.

Saudi Arabia extended its unilateral production cut by another three months as it seeks to support a fragile global market.  The move will hold output at about 9 million barrels a day, the lowest level in several years. Russia alluded to curbing 300,000 barrels a day of exports through year-end. As a result, oil inventories declined globally. Additionally, the global oil demand is increasing boosted by summer air travel, power generation, and petrochemical operations in China. Consequently, the combination of decreased supply of oil due to OPEC+ agreements and increased demand from various sectors has led to high oil prices.

To address the significant under-recoveries caused by these global dynamics, the Ministry has decided to increase the prices of petrol and diesel effective today September 6, 2023. Petrol price increased by 120 cents per liter, resulting in a new price of N$20.98 per liter while diesel prices(50 ppm) and (10 ppm) increased by 170 cents per liter, bringing the new price to N$20.75 per liter and N$20.95 per liter respectively.

Figure 1: Namibia Fuel Prices, January – September 2023

Source: Ministry of Mines and Energy

Outlook

We expect oil prices to remain on the current trend in short-term, stemmed by the anticipated oil production cuts by the OPEC+ countries. Furthermore, the global oil demand boosted by summer air travel, power generation and petrochemical operations in China, and the further currency depreciation against the US dollar boosts the chances of possible elevation in fuel prices.

Executive Summary

• In July 2023, the annual inflation rate slowed to 4.5%, the lowest since March 2022, from the 6.8% recorded in July 2022 and 5.4% recorded the prior month. (Figure 1)
• The main contributors to a decline in inflation were: transport, hotels, cafes and restaurants, furnishings, household equipment, and routine maintenance of the house (Figure 2)
• On a monthly basis, Namibia recorded an inflation rate of 0.3% an increase from 0.1% in recorded for June 2023. The increase mainly emanated from the categories of alcoholic beverages and tobacco (from 0.2 % to 1.1%), transport (from -0.4% to 0.5%), and clothing and footwear (from –0.1% to 0.2%).

Analysis

• The transport category which accounts for 14.3% of the consumer basket registered a decline in the annual inflation rate of 2.5% in July 2023 compared to 20.9% recorded in July 2022. The decline in the annual inflation rate for this component was reflected mainly in the subcomponent of operation of personal transport equipment which declined by 6.2% compared to 35.5% obtained in July 2022 attributed to the 13.1% fall in petrol and diesel prices
• Hotels, cafes, and restaurants account for 1.4% of the consumer basket recorded a decline in the annual inflation rate of 5.3% in July 2023 compared to 9% recorded in July 2022. This was driven by a downturn in demand for accommodation services which declined by 4.3% compared to 17.6% obtained in July 2022
• 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 7.0% in July 2023 compared to 8.8% recorded in July 2022. This was attributed to a decline in the price levels of goods and services for routine household maintenance
• Additionally, at the zonal level, different regions in Namibia showed varying annual inflation rates. Zone 1, which includes regions like Kavango East, Kavango West, Kunene, Ohangwena, Omusati, Oshana, Oshikoto, Otjozondjupa, and Zambezi, had the highest inflation rate at 4.7%. Zone 2, representing the Khomas region, recorded an annual inflation rate of 4.6%, while Zone 3, comprising //Kharas, Erongo, Hardap, and Omaheke regions, recorded an annual inflation rate of 4.2% for July 2023

Figure 1: Annual Inflation Index & Rate, Namibia (July 2022 – July 2023)

Source: NSA & HEI Research

Figure 2: Sub-Categorical analysis (%) change Year on Year, (July 2022 – July 2023)

Source: NSA & HEI Research

Outlook

The deflationary transport, hotels, cafes, and restaurants, furnishings, household equipment, and routine maintenance of the house categories have resulted in Namibia’s inflation rate slowing substantially.  Going forward we expect inflation to continue easing in the short to medium term.

Executive Summary

• In May 2023, the annual inflation rate rose to 6.3% from the 5.4% recorded in May 2022 and from the 6.1% recorded the prior month. (Figure 1)
• The categories of food and non-alcoholic beverages (12.5%), recreation and culture (9.9%), miscellaneous goods and services (7.7%), and alcoholic beverages and tobacco (7.5%) saw the biggest changes in the annual inflation rate. (Figure 2)
• Namibia recorded an inflation rate of 0.2% on a monthly basis in May 2023 compared to 0.4% in April 2023

Analysis

• The NCPI basket, which includes 16.5% of food and non-alcoholic beverages, had year-over-year inflation of 12.5% during the review period as opposed to 6.6% during the same period in 2022. This emanated from an increase in the demand for green pepper, cabbage, cucumber, and hot beverages such as tea due to the winter season (figure 3)
• The annual inflation rate for recreation and culture rose from 4.3% to 9.9%. This was caused by a 99.2% increase in package vacations as a result of a boost in tourism activities
• For miscellaneous goods and services, the annual inflation rate rose from 0.5% to 7.7%. This occurred due to the demand for insurance services
• The category for alcoholic beverages and tobacco increased from 4.7% during the same time last year to 7.5% this year. This was primarily impacted by the 8.4% increase in the cost of alcoholic beverages, especially white spirits 

Figure 1: Annual Inflation Rate Namibia, (May 2022 – May 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: Annual inflation rate for food and non-alcoholic beverages per subgroup, (May 2022 – May 2023)

Source: NSA & HEI Research

Outlook

We anticipate that inflation will continue to be higher for longer as a result of South Africa's subdued economic outlook, which is primarily caused by the energy crisis, transportation bottlenecks, and the local currency hovering at an all-time low as a result of recent diplomatic tensions. This is because a significant portion of Namibia's imports, specifically food, which is the primary driver of the annual inflation, is imported from South Africa.

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 12^th 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.

Executive summary

• The annual inflation rate for March 2023 increased to 7.2%, up from 4.5% recorded for the same period last year. (Figure 1)
• The drivers of an increase in the annual inflation rate were the food & non-alcoholic beverages, alcoholic beverages & tobacco, and miscellaneous goods & services categories. (Figure 2)
• On a monthly basis, Namibia recorded an inflation rate of 0.6% in March 2023 compared to 0.4% recorded in February 2023

Analysis

• Food and non-alcoholic beverages category which accounts for 16.5% of the NCPI basket annual inflation increased to 14.6% during the month of March 2023 compared to 4.6% recorded during March 2022. The increase in the food and non-alcoholic beverages component was mainly driven by an increase in the price levels of fruit, bread & cereal, and sugar, jam, honey, syrups, chocolate & confectionery accounting for 29.1%, 20.8%, and 14% respectively
• The alcoholic beverages and tobacco category which accounts for 12.6% of the NCPI basket annual inflation increased to 6.9% from 4.1% recorded during the same period last year. This was mainly influenced by an increase in the price of white spirits alcoholic beverages and an increase in the price level of cigarettes as a result of an increase in sin tax   
• The annual inflation rate for the miscellaneous goods and services category which accounts for 5.4% of the consumer basket increased by 7.3% during the month of March 2023 compared to 1.1% recorded during March 2022. The miscellaneous goods and services were driven by the high demand for insurance.

Figure 1: Annual Inflation Rate (March 2022 – March 2023)

Figure 2: Sub-Categorical analysis (%) change Year on Year and Month on Month

Figure 3: % changes of the main commodities that drove the annual inflation rate, (March 2023 compared with March 2022)

Outlook

• We project that the prices for paraffin will remain elevated, especially for households that are not linked to the grid because the winter season is approaching. The season requires a high use of energy and hence this will lead to an increase in the demand for energy

• Global food prices were set to stabilize for the year 2023 due to increased global supply and record production in India. Namibia’s largest grain-processing company Namib Mills confirmed a decrease in pasta polana, king pasta, rice, and polana instant noodles from 17 April 2023.
• Rice will see a decrease in the price of between 5% and 6%, pasta polana and king pasta between 9% and 11%, and polana instant noodles will go down by 15%
• As such we anticipate food prices to moderate for the month of April 2023.