Inflation report, June 2023

Executive Summary

• In June 2023, the annual inflation rate slowed to 5.3% from the 6.0% recorded in June 2022 and from the 6.3% recorded the prior month. (Figure 1)
• The biggest contributors to inflation were: food and non-alcoholic beverages (11.7 %), recreation and culture (10.1%), and miscellaneous goods and services (8.1 %). (Figure 2)
• Namibia recorded an inflation rate of 0.1% on a monthly basis in June 2023 compared to 0.2% in May 2023. The monthly decline was mainly driven by transport inflation which recorded a decline of 0.4%

Analysis

• The food and non-alcoholic beverages component which accounts for 16.5% of the NCPI basket, recorded an annual inflation rate of 11.7% for June 2023, this was less than the 12.5% recorded in May 2023 but more than the 7.0% recorded for June 2022. The increase in the annual inflation rate for this category was mainly attributed to an increase in the prices of vegetables (18.5%), bread and cereals (17.3%), and fruits (17.2%). This was the 6^th month of Food and non-alcoholic beverages being the largest contributor to inflation.
• The transport category which accounts for 14.3% of the consumer basket registered a decline in the annual inflation rate of 0.1% in June 2023 compared to 18.6% recorded in June 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 2.5% compared to 32.0% obtained in June 2022 attributed to the -7% fall in petrol and diesel prices. On a monthly basis, the category registered a decline of 0.4% in the general level of prices in June 2023 compared to a decline of 0.6% registered in May 2023.
• Recreation and culture recorded an increase in the annual inflation rate of 10.1% from 4.9%. This was influenced by an increase in the demand for package holidays as travel activities increases due to June being a school holiday month
•  The annual inflation rate for miscellaneous goods and services increased from 0.8% to 8.1%. This was driven by an increase in prices of insurance services

Figure 1: Annual Inflation Index & Rate Namibia, (June 2022 – June 2023)

Source: NSA & HEI Research

Figure 2: Sub-Categorical analysis (%) change Year on Year(y-o-y) and Month on Month(m-o-m)

Source: NSA & HEI Research

Outlook

Going forward we expect inflation to continue easing mainly due to the base effect and the anticipated decline in prices of major components such as food and transport. This is due to easing cost-push factors and a decline in global oil prices.