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Annual inflation continues slowing down but headline inflation creeping up

Annual inflation continues slowing down but headline inflation creeping up

According to the Namibia Statistics Agency (NSA), the June 2018 annual inflation rate stood at 4% as compared to 6.1% recorded in June 2017.

Statistician General at the NSA, Alex Shimuafeni said that the twelve month average annual and average monthly inflation rate for the period July 2017 to June 2018 stood at 4.5% and 0.3% respectively, while the calendar year average from January 2018 to June 2018 was estimated at 3.7% and 0.5%.

“On a monthly basis, the inflation rate decreased to 0.2% compared to 0.4% recorded during the previous month,” he added.

Meanwhile, Klaus Schade, research associate at the Economic Association of Namibia said that headline inflation is continuing its upward trajectory mainly because of fuel price increases.

“We have, however, expected a sharper increase in transport inflation, and hence in overall inflation, since fuel prices for Windhoek increased by an average of 14.5% in June 2018 compared to June 2017,” he said.

Schade stressed that fuel price increases in July and most likely also in August will put further upward pressure on the inflation rate. He explained that if this increase happens, it will also affect production costs and, if it continues, it will result in second-round effects and price increases for goods sensitive to the cost of fuel.

“Likewise, we expect the inflation rate for bread and cereals to increase further mainly because of the low base effect since May 2017 when bread and cereal prices started to actually decline. On the other hand, better grazing conditions could result in a further slowdown of meat prices. Food price could remain at current level, because of the opposing trends of bread price and meat price increases,” Schade said.

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Donald Matthys

Donald Matthys has been part of the media fraternity since 2015. He has been working at the Namibia Economist for the past three years mainly covering business, tourism and agriculture. Donald occasionally refers to himself as a theatre maker and has staged two theatre plays so far. Follow him on twitter at @zuleitmatthys