Headline inflation stabilises, month on month inflation down incrementally

For three months in a row, monthly inflation measured year over year, has remained 5.2%. This does not mean however, that inflation has remained static, it merely shows a coincidence that the monthly inflation rates for October, November and December 2017, were 5.2% higher than the monthly inflation rates for the same three months in 2016.

“Although the annual inflation rate has remained constant at 5.2% for the past 3 months (October to December 2017), the actual indices were 127.9, 128.2 and 128.4 respectively” said Statistician General, Mr Alex Shimuafeni on Thursday when the Namibian Statistics Agency released the December inflation data.

In December 2016, monthly inflation measured year on year, stood at a significant 7.3% indicating just how much inflationary pressures have abated during 2017. Inflation peaked in January 2017 when it measured a staggering 8.3%. For the duration of 2017, monthly inflation, yoy, has followed a steady downward trajectory while month on month inflation has fluctuated between 0.1% and 0.4%.

Measured from month to month, inflation in December 2017 was marginally weaker than in November, measuring 0.2% versus the 0.3% of the previous month.

Mr Shimuafeni said the three main drivers of December inflation were Housing, water, electricity, gas and other fuels which expanded by 9.2%, Education which was up 7.8%, and Transport which was 6.6% more expensive. Other significant contributors were Hotels & Restaurants (5.5%), Health Services (5.2%), and Alcohol & Tobacco (4.6%).

The Housing, Water, Electricity component of the inflation basket also carries the heaviest weight, 28.36%, indicating that price movements in this category have a disproportionately large influence on the overall headline inflation figure.

Average annual inflation for 2017, the statistic most commonly used by HR managers to determine annual increments, measured 6.2%.

The statistics agency said Namibian inflation is largely determined by three categories of the overall NCPI basket, namely (i) Housing, water, electricity, gas and other fuels, (ii) Food and non-alcoholic beverages and (iii) Transport, which cumulatively make up just under 60% of the total inflation basket. Alcoholic beverages and tobacco make up another 12.6% meaning that the four largest categories represent well over 70%of the total basket.

The basket now contains over 350 items, grouped into 12 categories and 55 sub-categories, for which prices are recorded on a monthly basis from more than 900 retail outlets.