Executive Summary
- In January 2024, the annual inflation rate declined to 5.4%, compared to the 7.0% recorded in January 2023, on a monthly basis inflation slightly increased compared to the 5.3% recorded in December 2023 (Figure 1)
- Between January 2023 and January 2024, the lowest monthly inflation rate occurred in December 2023
- The main contributors to the decline in annual inflation were food and non-alcoholic beverages, transport, and miscellaneous goods and services (Figure 2)
- On a monthly basis, price levels in Namibia increased by 1.3%, compared to a deflation of 0.1% recorded during the previous month
Analysis
- Food and non-alcoholic beverages, which account for 16.5% of the inflation basket, recorded an annual inflation rate of 6.5% during January 2024, compared to 14.0% recorded in January 2023. This marks a slower increase compared to the 22.3% witnessed during the same month in the previous year. The slow increase in the annual inflation rate of this subcategory was mainly observed in the price levels of maize meal/grain (from 37.2% to -7.5%); bread, cake flour (27.1% to -1.7%); macaroni, spaghetti, and noodles (18.9% to 0.3%); mealie rice/malt (from 19.2% to 2.6%); and bread (from 19.2% to 5.5%)
- The transport category, which accounts for 14.3% of the inflation basket, recorded an annual change of 6.1% during January 2024, compared to the 11.1% recorded in January 2023. The slower increase in the annual inflation rate for this component was reflected mainly in the operation of personal transport equipment from (15.9% to 6.7%) specifically parking fees and the prices of fuel
- Miscellaneous goods and services, accounting for 5.39% of the consumer basket, recorded an annual change of 4.1% during January 2024, compared to the 7.2% recorded in January 2023. This was driven by a decline in demand for insurance services which declined to 4% compared to 15.9% recorded in January 2023
- Core inflation stood at 4.9%, while headline inflation accelerated to 5.4% from December’s 5.3%, translating into a 0.5% difference between core and headline inflation (See Figure 1)
Figure 1: Annual Inflation Rate, Namibia (January 2023 – January 2024)
Source: NSA & HEI Research
Figure 2: Sub-Categorical analysis (%) change Year on Year (January 2023 – January 2024)
Source: NSA & HEI Research
Outlook
The decline in the annual inflation rate indicates a somewhat volatile trajectory, suggesting that while there has been a reduction in inflation, it remains subject to fluctuation. We anticipate that the trend of weakening inflation will continue. However, uncertainties and external factors such as fluctuations in oil prices and the global demand for commodities could contribute to fluctuations in inflation rates throughout the year, necessitating close monitoring and adaptability in response to changing economic conditions.