Category: Inflation

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.

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.