Consumer Inflation at 7 year-high – PSG
According to the Namibia Statistics Agency (NSA), the annual headline inflation rate, as measured by the Consumer Price Index (CPI), increased in January to a record new but same 8.2% last seen 7 years ago.
Looking at the four largest sub-indices comprising the total CPI, PSG Wealth Management found the food & non alcoholic beverages sub-index increased to a year-on-year 13.2% last month, higher than the 12.5% increase recorded in December 2016.
The inflation rate ticked higher from 7.3% year-on-year in December 2016 to a 8.2% year climb in January – according to the NSA.
According to PSG the number of items that are only measured in January saw significant increases, namely, rental payments (9.7% y-o-y), primary and secondary education costs (11.9% y-o-y) and financial services (18% y-o-y).The monthly CPI inflation rate jumped to 3.2% month-on-month from 0.2% in December.
The PSG brief notes how much rental payments weigh in 23% of the overall CPI, making a significant contribution to the higher headline inflation rate last month. Food inflation (13.5% y-o-y) also continues to rise relentlessly, mostly due to the lagged impact of severe drought conditions on food prices
NSA said that a sharp rise of bread and cereals at 3.5% in the food basket was recorded, while meat was recorded at 10.3%, sugar products at 19.7% year-on-year and nonalcoholic beverages by 10.4%. The alcoholic beverages & tobacco sub-index increased by 5.8% in January, slightly higher than the 5.6% increase in the preceding month, mainly attributable to higher alcoholic beverage prices of 6.9% year-on-year.
According to PSG possible relief in food prices in the forthcoming months is expected as Namib Mills announced in January that it will cut some of the prices of its popular food products (such as maize meal and rice) thanks to a stronger Namibian dollar and an initial improved outlook for crop production in the Southern African region.
Meanwhile, the NSA said housing, utilities, gas and other fuels sub-index increased by 9.3% year-o-year last month, higher than the 7.6% yearly increase recorded in December, driven by a 9.7% increase in rental payments.
“The transport sub-index increased by 5.2% in January, compared to a yearly 3.9% increase in the previous month, driven by higher vehicle prices and the operational cost of personal transport equipment,” NSA said.