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Food inflation eases in August – headline inflation almost static

Food inflation eases in August – headline inflation almost static

Despite the prices for meat rising by 6% in August, overall food price inflation slowed down from 3.2% in July 2018 to 2.7% in August 2018, the Namibia Statistics Agency reported in the latest Namibia Consumer Price Index released earlier this week.

Price increases for bread and cereals accelerated in August compared to July to 2.6% from 1.5% resulting in the second strongest price increase this year. Although meat prices rose faster (6%) in August than in July 2018 (5.1%), prices increased at a slower pace than during the first half of this year.

Klaus Schade, Research Associate at the Economics Association of Namibia said that this is in part caused by the base effect, since prices dropped by 0.5% in August 2017 and hence prices have increased from a low level.

Prices for milk dropped by 2.7% compared to August 2017, which is the strongest price decline since April 2011. Prices for sugar declined by 1.9% in August compared to a decline of 0.6% in July. Fruit prices increased (7.9%), but at a slower pace than in July (12.7%), like prices for vegetables that rose by 6%, which was below the inflation rate for vegetables in July (8%) and June (6.1%).
Overall, the annual inflation rate eased slightly from 4.5% in July to 4.4% in August 2018, but dropped by 1 percentage point from 5.4% in August 2017. On a month on month basis, headline inflation was almost unchanged, moving a mere 0.03%.

“We expect inflation to pick up again owing to fuel price increases by N$0.40 per litre in September, which translates into a price increase of 23.4% compared to September 2017,” Schade added.

He explained that fuel price increases contributes almost 9% to the overall inflation rate. Fuel price increases have a direct impact on transportation costs and over time on the costs of other products that have to be transported.

“Furthermore, the depreciation of the Namibia dollar against other currencies such as the US dollar and Chinese yuan will push up prices for other imported products in the coming months,” Schade predicted.


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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