Category: Inflation

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.

Executive summary

• The annual inflation rate for February 2023 increased to 7.2%, up from 4.5% recorded for the same period last year. (Figure 1)
• The two major drivers of an increase in the annual inflation rate were the food & non-alcoholic beverages, and miscellaneous goods and services categories. (Figure 2)
• On a monthly basis, Namibia recorded an inflation rate of 0.4% in February 2023 compared to 1.1% recorded in January 2023

Analysis

• Food and non-alcoholic beverages which accounts for 16.5% of the NCPI basket annual inflation increased to 14% during the month of February 2023 compared to 5.4% recorded during February 2022. The increase in the food and non-alcoholic beverages component was mainly driven by an increase in the price levels of fruit, bread, and cereal accounting for 26.8% and 22% respectively
• The rise in food prices was attributed to the hike in the prices of various products, such as maize meal, flour, pasta, among others, by Namib Mills on November 14, 2022. For instance, a 10kg bag of maize meal that previously cost around N$110 now costs approximately N$150.
• In February 2023, the annual inflation rate for the miscellaneous goods and services category, comprising 5.4% of the consumer basket, rose by 7.0%, which is considerably higher than the 0.9% recorded in February 2022. The surge in miscellaneous goods and services can be attributed to the heightened demand for new policies in the general liability and riot/strike classes of insurance, which led to the implementation of new policies.

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

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

Outlook

• The persistent upsurge in food prices, particularly for essential commodities such as Giffen goods that have no close substitutes is a significant threat to food security and household cost of living. This is because inflation has continuously eroded the purchasing power of consumers
• We anticipate inflation to remain elevated in the short term as a result of supply-side factors that continue to weigh on the prices of goods.

Executive summary

• The annual inflation rate for January 2023 increased to 7.0%, up from 4.6% recorded for the same period last year. (figure 1)
• The two major drivers of an increase in the annual inflation rate were the “food & non-alcoholic beverages”, and transport categories. (figure 2)
• On a monthly basis, Namibia recorded an inflation rate of 1.1% in January 2023 compared to 0.3% recorded in the previous month

Analysis

• Food and non-alcoholic beverages which accounts for 16.5% of the NCPI basket annual inflation increased by 14% during the month of January 2023 compared to 5.6% recorded during January 2022. The increase in the food and non-alcoholic beverages component was mainly driven by an increase in the price levels of fruit, bread, and cereal accounting for 22.3% respectively
• The annual inflation rate for the transport category which accounts for 14.3% of the consumer basket continues to be a driver of the overall inflation although it reduced to 11.1% for January 2023 when compared to 13.5% recorded in January 2022. The decrease in the transport component was mainly driven by a decline in the price levels of operation of personal transport equipment (fuel costs)

Figure 1: Annual Inflation Rate

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

Outlook

• We anticipate inflation to remain elevated in the short term as a result of supply-side factors that continues to weigh on demand and supply

Executive summary

• The annual inflation rate for December 2022 increased to 6.9%, up from 4.5% recorded for the same period last year. (figure 1)
• The main drivers of an increase in the annual inflation rate were “transport”, “food & non-alcoholic beverages”, “alcoholic beverages & tobacco” and “housing, water, electricity, gas, and other fuels” categories. (figure 2)
• On a monthly basis, Namibia recorded an inflation rate of 0.3% in December 2022 a decline from 0.5% that was recorded for November 2022
• The main contributors to the monthly inflation rate recorded in December 2022 were mainly food and non-alcoholic beverage (2.2%) and hotels, cafes, and restaurants (0.7%)
• The annual inflation rate for the year 2022 averaged 6.1%

Analysis

• The annual inflation rate for housing, water, electricity, gas, and other fuels which accounts for the highest (28.5%) of the consumer basket increased by 2.1% during December 2022 compared to 1.2% registered in December 2021. This came as a consequence of an increase in the costs of “electricity, gas and other fuels” and “rental payment for dwelling”
• The annual inflation rate for the transport category which accounts for 14.3% of the consumer basket continues to be the main driver of the overall inflation, increasing by 14.8% for December 2022 compared to 14.3% recorded in December 2021. The increase in the transport component was mainly driven by an increase in the price levels of operation of personal transport equipment (parking fees and lubrication)
• Food and non-alcoholic beverages which accounts for 16.5 percent of the NCPI basket annual inflation increased by 11.8% during the month of December 2022 compared to 5.1 percent recorded during December 2021 due to an increase in the price levels of vegetables, bread, and cereal, sugar, jam, honey, syrups, chocolate, and oils and fats. (figure 3)

Outlook

• We expect inflation to stabilize for 2023 and this could bring an end to the interest rate hike cycle globally by Central Banks in the medium term  

Figure 1: Annual Inflation rate

Figure 2: Categorical analysis, contribution to inflation % of total change

Figure 3: Categorical analysis YoY and MoM % changes, Namibia

Executive summary

• The annual inflation rate increased to 7.0% for November 2022 from 4.1% recorded in November 2021. See figure 1

• The annual inflation rate continues on an upward trend for 2022 with a slight downtick over the past 3 months

• The main drivers of an increase in the annual inflation rate were transport, hotels, cafes and restaurants, furnishings household equipment. See figure 2

Analysis

• The annual inflation rate for the transport category increased to 18.3% from 11.9% recorded during the same period last year. This was mainly influenced by an increase in the prices of fuel (diesel) and the increase in the price level of operation of personal transport equipment which increased by 27.3%

• The annual inflation for petrol and diesel rose to 46.1% on a year-on-year basis compared to 7.9% recorded in November 2021

• Hotels, cafes, and restaurants were the second largest contributor to inflation. These components’ annual inflation rate rose to 11.3% compared to 1.0% in relation to the same period last year driven by an increase in demand for accommodation services

Figure 1: Annual Inflation rates in Namibia vs. South Africa

Figure 2: Sub-Categorical analysis Year on Year %, Namibia

Outlook

• With the economy on a recovery path, inflation seems to have found its tipping point and has been on a sluggish downward path. Our biggest indicator is that production output has increased and trade levels have elevated hinting that supply chain problems are easing

• We anticipate that the annual inflation rate will continue on a downward trajectory for the month of December 2022 mainly due to the lower fuel prices as announced by the Ministry of Mines and Energy

Executive summary

• The annual inflation rate increased to 7.1% for October 2022 from 3.6% recorded during the same period last year. See figure 1

• The annual inflation rate averaged 5.9% from January to October 2022 compared to an average of 3.5% recorded during the same period last year.

• The main drivers of an increase in the annual inflation rate remain the transport, hotels, cafes and restaurants, furnishings household equipment, and routine maintenance of the house and food alcoholic beverages, and tobacco. See figure 2

• On a monthly basis, inflation increased by 0.2%

Analysis

• The annual inflation rate for the transport category increased to 17.8% from 10.7% recorded during the same period last year. This was influenced by an increase in the operation of personal transportation (fuel cost)

• An increase in the annual inflation rate for hotels, cafes, and restaurants from 1.4% to 10.6% was driven by an upturn in demand for accommodation services. This is further supported by the increase in national occupancy rate.  

• The annual inflation rate for furnishings household equipment and routine maintenance of the house increased to 9.6% from 5.3%. This was attributed to an increase in the price levels of goods and services for routine household maintenance

• Food and non-alcoholic beverages and tobacco which accounts for 16.5% of the inflation basket recorded an increase in the annual inflation rate of 9.1% from 5.2% recorded during the same period last year. This came as a result of an increase in the price levels of fruits, oils, and fats

Figure 1: Annual Inflation rate, Namibia

Figure 2: Sub-Categorical analysis Year on Year %, Namibia

Outlook

• We anticipate that the annual inflation rate for November 2022 to increase. This will be driven by an increase in the prices of food from the 14^th of November 2022 and an increase in fuel prices (diesel) as announced by the Ministry of Mines and Energy.

Executive summary

• The annual inflation rate increased to 7.1% for August 2022 from 3.5% recorded during the same period last year. See figure 1

• The annual inflation rate averaged 5.8% from January to September 2022 compared to an average of 3.5% recorded during the same period last year. This was mainly derived from the transport inflation category which emanated from high and volatile international crude oil prices in 2022

• The main drivers of an increase in the annual inflation rate were transport, hotels, cafes and restaurants, furnishings household equipment, and routine maintenance of the house and food alcoholic beverages, and tobacco. See figure 2

• On a monthly basis, inflation increased by 0.1% influenced by the price levels changes in transport (from 0.2% to -1.6%); housing, water, electricity, gas and other fuels (from 0.3% to 0.1%); recreation and culture (from 0.7% to 0.3%) and food and non-alcoholic beverages (from 0.8% to 0.6%)

Analysis

• The annual inflation rate for the transport category increased to 19.5% from 7.5% recorded during the same period last year. This was mainly influenced by an increase in the prices of fuel (petrol and diesel) driven by an increase in oil prices globally and an increase in the cost of public transportation services

• An increase in the annual inflation rate for hotels, cafes, and restaurants from 0.2% to 11.0% was driven by an upturn in demand for accommodation services due to a rebound in tourism-related activities

• The annual inflation rate for furnishings household equipment and routine maintenance of the house increased to 9.4% from 4.8%. This was due to an increase in the price levels of goods and services for routine household maintenance and heating and cooking appliances, refrigerators, washing machines, and similar major household appliances

• Food and non-alcoholic beverages and tobacco which accounts for 16.5% of the inflation basket recorded an increase in the annual inflation rate of 9.3% from 5.0% recorded during the same period last year. This came as a consequence of an increase in the price levels of bread and cereals, fruits and oils, and fats

• The communications category recorded deflation of - 0.3% for September 2022 declining from 0.9% recorded in September 2021. This could have been influenced by face-to-face engagement after the removal of the Covid-19 restrictions

Figure 1: Annual Inflation rate, Namibia

Figure 2: Sub-Categorical analysis Year on Year %, Namibia

Outlook

• Announcements made by Namibia Breweries Limited on an increase in the price levels of  alcoholic and non-alcoholic beverages and OPEC production out cuts will propel the transport and alcoholic beverages components of inflation and in turn annual inflation rate for October 2022
• We anticipate that the annual inflation rate for October will remain on an upward trend.
• We anticipate that the inflation will remain higher for longer.

Executive summary

• The annual inflation rate increased to 7.3% for August 2022 from 3.4% recorded during the same period last year. See figure 1.

• The annual inflation rate continues on an upward trend since May 2022 with the transport category being the main contributor. This emanated from high and volatile international crude oil prices

• The main drivers of an increase in the annual inflation rate were transport, hotels, cafes and restaurants, furnishings household equipment, and routine maintenance of the house and clothing and footwear. See figure 2.

• On a monthly basis, inflation increased by 0.3% an increase in the monthly inflation rate was mainly influenced by the price levels of public transportation services as a result of an increase in the bus fares from N$ 10 to N$ 13

Analysis

• The annual inflation rate for the transport category increased to 23.2% from 6.2% recorded during the same period last year. This was mainly influenced by an increase in the prices of fuel (petrol and diesel), increasing by 64% and 68% respectively and high prices parking fees. With Namibia being a dependent economy, high prices for oil in the international market saw Namibia vulnerable to oil demand and supply shocks and this led to skyrocketing fuel prices between August 2021 and August 2022

• An increase in the annual inflation rate for hotels, cafes, and restaurants from 2.9% to 9.3% was driven by an upturn in demand for accommodation services as the sector showed signs of recovery. This was augmented by a rebound in national occupancy rates from 20.1% to 61.2% for August 2022 as tourism normally peaks in the month of August (Hospitality Association of Namibia)

• The annual inflation rate for furnishings household equipment and routine maintenance of the house increased to 8.6% from 2.6%. This was influenced by an increase in the price levels of goods and services for routine household maintenance

• Clothing and footwear recorded an increase in the annual inflation rate of 1.1% from -2.7%. This came as a consequence of an increase in the price levels of dry-cleaning services and repair of footwear

• The health category recorded deflation of -1.8% for August 2022 declining from 3.5% to 1.7%. This resulted from low demand for outpatient, medical, dental, and paramedical services

Figure 1: Annual Inflation rates in Namibia vs. South Africa

Figure 2: Sub-Categorical analysis Year on Year %, Namibia

Figure 3: Sub-Categorical analysis Year on Year % change (August 2021- August 2022), South Africa

Outlook

• Energy prices and the rebalancing of demand back to pre-pandemic levels specifically in the tourism sector have driven up the annual inflation rate. The continuous increase in the inflation rate will compel central banks to continue tightening the monetary policy for price stability thereby suppressing spending patterns
• Although the economy is on a recovery path there remains an upside inflationary outlook risk in the short to medium term. This is evidenced by the continuous rise in the annual inflation rate
• We anticipate that the annual inflation rate for September will remain on an upward trajectory.