Category: Reports

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 fuel prices.

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 for announced for December 2023.