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Inflation falls below 6% since January 2016

Inflation falls below 6% since January 2016

The month of June marked the sixth consecutive month during which inflation moderated and marked the first time that the headline inflation rate has been below 6% since January 2016, according to research agency, PSG Namibia.

In a report PSG said inflation fell to 5.4% year on year in July, from 6.1% year on year in June 2017. Transport sub-indices and food and non-alcoholic beverages were the major drivers of lower inflation in July.

Meanwhile, the headline rate is expected to decline gradually during the rest of 2017, as food inflation edges lower thanks to base effects.

We forecast an average inflation rate of 6% for 2017 and that the Bank of Namibia will cut the repo rate by 25 bps at its meeting on Wednesday, given the expected further moderation in inflation, the modest near-term domestic economic growth outlook and the fact that the South African Reserve Bank cut its policy rate by 25 bps last month. South Africa and Namibia’s repo rates are not formally linked, but the Bank of Namibia does track the South African Reserve Bank’s interest rate moves closely,” PSG reported as responds to the latest Consumer Price Index released by the Namibia Statistics Agency.

Meanwhile another research firm, IJG noted that the Rand took a knock following the failed motion of no confidence against president Jacob Zuma, but fears of further immediate downgrades were squashed when S&P (Standards and Poors rating agency) stated that the failed motion did not have ruling on any downgrade scenario.

With the SARB having cut monetary policy rates in a bid to support growth and SA inflation returning to within the target band, inflation seems set to remain within these levels. However, it remains to be seen whether the currency will deteriorate further,” IJG stated.

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