Inflation slows down in March
Despite a record hike in petrol prices in March, figures released by the Central Bureau of Statistics shows that the annual rate of inflation slowed down from 7.4% in February to 6.9% in March. March marked the sixth consecutive month in which inflation has been above the upper limit of the 3 to 6% inflation target band adopted by other central banks in the region (Botswana and South Africa).
The fall in the rate of inflation was largely driven by a decrease in bread and cereals which fell from 15.4% in February to 12.9% in March. In an inflation update, Capricorn say the recent drop in bread and cereal inflation comes as little surprise as it has been known to lag the prices of wheat and maize, which have been on a decrease since the second quarter of 2011.
“With the Food and Agricultural Organisation of the United Nations expecting cereal stocks to rise, it is likely that we will see this trend persisting over the next couple months, and can be mainly ascribed to higher than expected global rice inventories,” Capricorn say.
And despite the Walvis Bay pump price for 93 Octane Leaded Replacement Petrol and 95 Octane Unleaded Petrol reaching a record high of N$9.77 and N$9.83 respectively in March, the annual rate of transport inflation registered a slight decline from 8.1% in February, to 8.0%.
“Although we may see a slight easing in demand for oil as a result of the approaching summer in the northern hemisphere, the recent depreciation of the Namibian dollar against the US dollar has offset any potential petrol price easing. This upward pressure in transport inflation is expected to continue, especially considering the petrol and diesel pump price was once again increased in April.”
March saw a 1.1% decrease in the annual rate of goods inflation from 9.5% in February, to 8.4%. Food price inflation also decreased slightly to 9.7% from 9.8% in February, however this figure remains relatively high compared to the corresponding period in 2011, where food price inflation stood at 2.6%.
Meat, oils and fats, as well as milk, cheese and eggs, experienced an increase in inflation, while the annual rate of services’ inflation increased from 4% in February to 4.4% in March.
Going forward Capricorn says it doesn’t anticipate any immediate easing of food and energy costs in the near future and as such expect the domestic inflation rate to remain above the 6% upper limit of the target adopted by other central banks in the region.
“South Africa, Namibia’s main trading partner, has surprised many economists with its recent inflation outcomes being on the downside. However, with the South African Reserve Bank expecting inflation to peak in the second quarter of 2012, we are likely to see that translate into further upward price pressure in the domestic market in the coming months.”