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Inflation drops to 3.9% in June

Inflation drops to 3.9% in June

After recording this years’ first lowest rate at 4.1 in May, the inflation rate further dropped to 3.9% in June, statistics revealed by the Namibia Statistics Agency indicate.

The Statistics Agency attributes the latest decline to decreases registered in the transport, housing, water, electricity, gas and fuel, health and goods and services sectors in the month under review.

According to Indileni Nanghonga, Analyst at Simonis Storm Securities, the 1.1% monthly increase in transport inflation was due to 2% monthly increase in the operation of personal transport equipment, caused by an increase in petrol and diesel prices by 30c/l during June 2019.

“The purchases of vehicles recorded a deflation of 0.5% m-o-m compared to a deflation of 1% in the prior month. The deflation in vehicle purchases is the resultant of massive specials and promotions by some dealerships (Ford and VW). July saw unchanged fuel prices and if the global oil price ($66.7/bbl) remains subdued coupled with a stronger NAD (N$13.9 against the USD), transport inflation could moderate,” Nanghonga said.

Meanwhile, housing, water, electricity, gas and other fuels recorded no monthly increase in price as the 0.4% m-o-m rise in electricity, gas and fuels was offset by a deflation in the regular maintenance and repair of the dwelling subcategory.

Nanghonga is of the view that the upward effect of the 5% water tariff increase by the City of Windhoek in July 2019 will be offset by the 2.5% electricity tariff decrease approved by the ECB.

“During May, President Hage Geingob declared a state of emergency on drought because of poor rainfall. One of the effects of a drought should be rising food prices. It is therefore surprising to observe a monthly deflation in the food category over the last three months. We are of the view that the food inflation number could be too good to be true. We maintain our fair case inflation forecast of 4.8% with a best-case scenario of 4.5% at the end of 2019,” Nanghonga noted.


 

About The Author

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

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