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Full gamut of inflation dynamics hidden by relatively stable headline inflation

Full gamut of inflation dynamics hidden by relatively stable headline inflation

The latest reading on the Namibia Consumer Price Index was released earlier this week, clearly showing a continuing trend of very stable so-called headline inflation. But this can be very misleading as there are various factors to consider when expressing the increase or decrease in prices in percentages. Although somewhat technical, it is important to understand the trends in inflation, especially if one wants to construct an inflation outlook for the rest of the year.

The Namibian Statistics Agency goes out of its way to make a very clear distinction between annual and monthly inflation, and further between such concepts as average annual and year to date inflation. To the layman these distinctions are confusing, obfuscating the basic fact that inflation expresses a change in prices over a given time. These intervals are not discretionary and they are chosen intentionally to conform to the conventional time cycles in the broader economy, i.e. months, calendar years, 12-month periods, and year to date.

While it is technically correct to refer to annual inflation for a particular month, in this case April, it must be remembered that this is only relevant as a comparison to April last year. The agency is 100% correct to say that inflation continued its downward trend because their annual inflation measure is a monthly measure compared to the same month, 12 months ago. In this case it is obvious that 3.6%, the latest reading for April is less than the 6.7% for April last year. The same methodology applies to every single month of the year, so for January, February and March, the three consecutive 3.5% readings are indeed a sign of a continued slowdown in inflation because the comparative reading for January, February and March last year, were 8.2%, 7.8% and 7% respectively. Remember these are all based on an underlying index which does not measure percentages but index points.

But the conventional way of expressing annual inflation fails to indicate the trend and that is where the concept relative inflation as opposed to nominal inflation comes in. On the surface, it seems inflation has been stable for the first four months of this year. Al least that is how it looks to most non-technical people, that is why we get a concept like headline inflation.

Headline inflation does not exist in formal statistics. It is a creation of the business press and it works well to convey the bigger inflation picture to an ordinary readership. It is the measure of inflation that is quoted most often, and it is simply the monthly (progressive) annual reading taken as if that is the inflation right now. It does not say anything about the incremental inflation from one month to the next, neither about average annual inflation, nor about inflation year to date. It is also an overall picture, or a representation of price movements as they apply to all the items in the basket.

Simply to say inflation continues to slow down because the monthly readings are less than the comparative monthly readings last year does not suffice. To make this clearer we need yet another concept and that is relative inflation. This is also the reason why the statistics agency compiles the basic price movements in an index and only calculated the percentages afterwards. It avoids all the complexities of relative inflation.

This is an expression of the rate of change in inflation or the so-called Delta. Let me explain this by using the first four months of this year as an example. Annual inflation in January was 3.5%. But this is a percentage based on the January 2017 reading which in itself is a percentage of January 2016. Do you see where this is going. Every month’s annual inflation reading is an expression of a previous variable 12 months earlier, carrying on up to 2010 when the index was rebased. This is highly confusing and conceals the real value of inflation statistics where companies use them to adjust their own pricing, and to negotiate annual increments with their staff.

If we apply relative inflation to the monthly readings, it is easiest to understand when expressed as coefficients. Without going too deep into technicalities, let me state that annual inflation from January 2017 to January 2018, expressed as a coefficient, is 0.287, for February it is 0.273, for March 0.245 and for April 0.241. This is merely a way of calculating percentages of percentages but it works well to identify a trend. What it also does is to support in a more tangible way the statistics agency’s notion that “inflation continues to come down.” (The coefficient gets smaller and smaller.)

But here is the real kicker in terms of the analytical value of relative inflation. When you reverse the calculation you will see that the Delta between January and February is 4.88%, between January and March 14.63% and between January and April a not-insignificant 16%. This is a substantial reduction in inflation, not only compared to last year, but also year to date.

It is only relative inflation that allows the analyst to show this trend in a way that it makes sense, or is digestible to the lay user. In plain simple language, it means that the effective April inflation is 16% less than the January inflation, and even more compared to last year.

If this is too complicated for the average reader, then you will understand why the concept of headline inflation has been created. This is fine as long as you remember this simple take on inflation is somewhat misleading. Inflation has not stabilised as it seems on the surface, it continues to decelerate but at a faster actual rate than the equally simple 12 month comparison. Delta should stabilise in July because that is when annual inflation first stabilised last year.

It bodes well for the economy in general. It will bring relief to household expenses quicker than anticipated, and in our context, consumer spending is an important part of what drives the bigger economy.



About The Author

Daniel Steinmann

Brief CV of Daniel Steinmann. Born 24 February 1961, Johannesburg. Educated at the University of Pretoria: BA, BA(hons), BD. Postgraduate degrees are in Philosophy and Divinity. Editor of the Namibia Economist since 1991. Daniel Steinmann has steered the Economist as editor for the past 29 years. The Economist started as a monthly free-sheet, then moved to a weekly paper edition (1996 to 2016), and on 01 December 2016 to a daily digital newspaper at It is the first Namibian newspaper to go fully digital. Daniel Steinmann is an authority on macro-economics having established a sound record of budget analysis, strategic planning and assessing the impact of policy formulation. For eight years, he hosted a weekly talk-show on NBC Radio, explaining complex economic concepts to a lay audience in a relaxed, conversational manner. He was a founding member of the Editors' Forum of Namibia. Over the years, he has mentored hundreds of journalism students as interns and as young professional jourlists. He regularly helps economics students, both graduate and post-graduate, to prepare for examinations and moderator reviews. He is the Namibian respondent for the World Economic Survey conducted every quarter for the Ifo Center for Business Cycle Analysis and Surveys at the University of Munich in Germany. He is frequently consulted by NGOs and international analysts on local economic trends and developments. Send comments to

Following reverse listing, public can now acquire shareholding in Paratus Namibia


20 February 2020, Windhoek, Namibia: Paratus Namibia Holdings (PNH) was founded as Nimbus Infrastructure Limited (“Nimbus”), Namibia’s first Capital Pool Company listed on the Namibian Stock Exchange (“NSX”).

Although targeting an initial capital raising of N$300 million, Nimbus nonetheless managed to secure funding to the value of N$98 million through its CPC listing. With a mandate to invest in ICT infrastructure in sub-Sahara Africa, it concluded management agreements with financial partner Cirrus and technology partner, Paratus Telecommunications (Pty) Ltd (“Paratus Namibia”).

Paratus Namibia Managing Director, Andrew Hall

Its first investment was placed in Paratus Namibia, a fully licensed communications operator in Namibia under regulation of the Communications Regulatory Authority of Namibia (CRAN). Nimbus has since been able to increase its capital asset base to close to N$500 million over the past two years.

In order to streamline further investment and to avoid duplicating potential ICT projects in the market between Nimbus and Paratus Namibia, it was decided to consolidate the operations.

Publishing various circulars to shareholders, Nimbus took up a 100% shareholding stake in Paratus Namibia in 2019 and proceeded to apply to have its name changed to Paratus Namibia Holdings with a consolidated board structure to ensure streamlined operations between the capital holdings and the operational arm of the business.

This transaction was approved by the Competitions Commission as well as CRAN, following all the relevant regulatory approvals as well as the necessary requirements in terms of corporate governance structures.

Paratus Namibia has evolved as a fully comprehensive communications operator in Namibia and operates as the head office of the Paratus Group in Africa. Paratus has established a pan-African footprint with operations in six African countries, being: Angola, Botswana, Mozambique, Namibia, South Africa and Zambia.

The group has achieved many successes over the years of which more recently includes the building of the Trans-Kalahari Fibre (TKF) project, which connects from the West Africa Cable System (WACS) eastward through Namibia to Botswana and onward to Johannesburg. The TKF also extends northward through Zambia to connect to Dar es Salaam in Tanzania, which made Paratus the first operator to connect the west and east coast of Africa under one Autonomous System Number (ASN).

This means that Paratus is now “exporting” internet capacity to landlocked countries such as Zambia, Botswana, the DRC with more countries to be targeted, and through its extensive African network, Paratus is well-positioned to expand the network even further into emerging ICT territories.

PNH as a fully-listed entity on the NSX, is therefore now the 100% shareholder of Paratus Namibia thereby becoming a public company. PNH is ready to invest in the future of the ICT environment in Namibia. The public is therefore invited and welcome to acquire shares in Paratus Namibia Holdings by speaking to a local stockbroker registered with the NSX. The future is bright, and the opportunities are endless.