Category: Inflation

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.

Executive summary

• The annual inflation rate increased to 6.8% for July 2022 from 4.0% recorded during the same period last year. See figure 1
• The main drivers of an increase in the annual inflation rate were transport, hotels, cafes and restaurants, clothing and footwear, recreation and culture, alcoholic beverages, and tobacco. See figure 2
• On a monthly basis, inflation increased by 0.8%
• An increase in the monthly inflation rate was mainly influenced by the price levels of fruits specifically avocadoes

Analysis

• The annual inflation rate for the transport category increased to 20.9% from 10.6% recorded during the same period last year. This was mainly influenced by an increase in the prices of fuel and driving lessons, licenses, and tests
• An increase in the annual inflation rate for hotels, cafes, and restaurants from 1.0% to 9.8% was driven by a high uptake for accommodation services as the tourism sector shows positive sentiments
• Clothing and footwear recorded an increase in the annual inflation rate of 0.3% from -3.0%. This came as a consequence of an increase in the price levels of dry-cleaning services and repair of footwear.
• The annual inflation rate for the recreation and culture category increased from 2.1% to 5.1% due to the high demand for package holidays influenced by the  July school holiday
• The annual inflation rate for alcoholic beverages and tobacco increased to 5.4% from 2.5%. This was influenced by an increase in the price levels of white spirits and beer

Figure 1: Annual Inflation rate

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

Outlook

• Higher energy and food prices and the rebalancing of demand back toward the sectors that were negatively impacted by the Covid-19 pandemic have driven up inflation. Persistently high inflation will compel central banks to raise interest rates for price stability, thereby suppressing spending patterns.
• A recent sharp decline in oil prices as a result of a rebound in the international crude oil market which increased crude oil production by major oil producers. This implies that national fuel prices are expected to decline and slow the overall inflation much quicker than initial expectations.

Executive summary

• The annual inflation rate increased to 6.0% from 4.1% recorded during the same period last year. See figure 1
• The main drivers of an increase in the annual inflation rate were transport, hotels, cafes and restaurants, furnishings, household equipment, routine maintenance of the house, alcoholic beverages, and tobacco.
• The main price hikes were recorded for the subcategories of operation of personal transport equipment, package holidays, and goods and services for household routine maintenance. See figure 2

Analysis

• The transport category recorded an increase in the annual inflation rate of 18.6%. This was mainly influenced by an increase in the prices of petrol/diesel and driving lessons, licenses, and tests
• Hotels, cafes, and restaurants recorded an increase in the annual inflation rate of 8.6%. This was driven by a high demand for accommodation services as the tourism sector shows positive developments
• Furnishings, household equipment, and routine maintenance of the house recorded an increase in the annual inflation rate of 7.1% as a consequence of an increase in the price levels of goods and services for routine household maintenance
• The annual inflation rate for alcoholic beverages and tobacco increased to 5.8% as a result of an increase in the price levels of white spirits

Figure 1: Annual Inflation rate

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

Outlook

• The annual inflation rate will remain elevated in the short to medium term due to global uncertainty and the depreciation of the Rand against the USD.