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.