Executive Summary
- In September 2023, the annual inflation rate slowed to 5.4% compared to 7.1% in September 2022. (Figure 1)
- The main contributors to a decline in the annual inflation were: transport, furnishings, household equipment, and routine maintenance of the houses and hotels, cafes, and restaurants, (Figure 2)
- On a monthly basis, Namibia recorded an inflation rate of 0.8% an increase from 0.4% recorded for August 2023. The increase mainly emanated from the categories of transport (from 0.5 % to 2.9%), alcoholic beverages and tobacco (from 0.5% to 0.8%)
Analysis
- The transport category which accounts for 14.3% of the consumer basket registered a decline in the annual inflation rate of 2.2% in August 2023 compared to 19.5% recorded in August 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 to 0.1% compared to 30% recorded in September 2022 attributed to a 3.3% fall in petrol and diesel prices
- 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 5.5% in September 2023 compared to 9.4% recorded in September 2022. This was attributed to a decline in the price levels of goods and services for routine household maintenance which declined to 4.5% compared to 25.1% recorded in September 2022
- Hotels, cafes, and restaurants account for 1.4% of the consumer basket recorded a decline in the annual inflation rate of 6.9% in September 2023 compared to 11% recorded in September 2022. This was driven by a downturn in demand for accommodation services which declined to 7.6% compared to 20.4% recorded in September 2022.
- Core inflation stood at 4.9% in September 2023 unchanged from 4.9% recorded in August 2023 and headline inflation increased to 5.4% for September 2023 from 4.7% recorded the previous month. The gap between core and headline inflation could raise concerns about long-term inflation trends. If this gap widens, it may signal a need for more proactive inflation-fighting measures. Figure 1
Figure 1: Annual Inflation Rate, Namibia (September 2022 – September 2023)
Source: NSA & HEI Research
Figure 2: Sub-Categorical analysis (%) change Year on Year (September 2022 – September 2023)
Source: NSA & HEI Research
Outlook
The annual inflation for Namibia indicates a decreasing trend, driven by significant declines in specific categories such as transport and household expenses. The hospitality sector which is used as a proxy for the tourism sector also saw a reduction in inflation due to decreased demand for accommodation services. However, the gap between core and headline inflation raises concerns and calls for vigilant monitoring by the monetary and fiscal authorities to ensure price stability. We anticipate inflation to increase for the transport component due to higher Brent crude oil prices.