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.