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Lockdown pushes economy to disinflation precipice – headline inflation down to a scary 1.6%

Lockdown pushes economy to disinflation precipice – headline inflation down to a scary 1.6%

The devastating damage done by the lockdown was confirmed this week by yet another source when the Namibia Statistics Agency released the inflation report for April 2020. It is very distressing that this report shows the Namibian economy is moving dangerously close to ignite disinflationary forces with the headline inflation number reading only 1.6%

Statistician General, Mr Alex Shimuafeni stated in the report that the annual inflation rate, measured monthly and compared to the same month a year ago, has now dropped to a dangerously low 1.6 %. In April last year, headline inflation still measured 4.5%, which was already considered low then.

On a monthly basis, the consumer price index has turned negative, reading -0.3% compared to the previous month, March.

“The slow growth in the annual inflation was largely attributed by Alcoholic beverages and tobacco (from 7.5% to 0.4%); Housing, water, electricity, gas and other fuels category (from 2.2% to -0.5%); and Transport (from 7.1% to -0.1%),” said the statistics agency.

It terms of inflation distribution across the country, Zone 1, i.e. Kavango East, Kavango West, Kunene, Ohangwena, Omusati, Oshana, Oshikoto, Otjozondjupa, and Zambezi reported headline inflation of only 2.1% with month inflation negative at -0.4%.
In Zone 2, the Khomas region, headline inflation was even lower, reading only 0.8% with monthly inflation also negative at -0.4%.
In Zone 3, the South and East, headline inflation was 2.2% and monthly inflation negative at -0.2%.

Regarding the practicalities of collecting inflation data, Mr Shimuafeni said “the collection of prices became increasingly difficult during the national lockdown period as Price Agents could not visit business outlets as standard practice. The prices of goods and services which could not be collected or only collected to a very limited extent had to be updated using a twin-approach imputation technique based on international recommendations. Therefore, in our case, a class mean imputation method was applied to the groups in which some prices were collected, while the groups that had no price data, the All Items Index was used for the imputation.”

The annual inflation for goods measured 2.2% while the usually sticky services inflation grew by on 0.9%. The average annual inflation rate, April to April, came to 3.1%.


 

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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