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.