Monthly inflation inches higher
The gradually rising inflation shows no sign of abating in the short to medium term according to Simonis Storm Securities. Inflation, which has edged up buy 0.1 percentage points, stands at 6.2% at the end of June. This rate is 0.6 percentage points higher than the recorded rate for June 2012. The monthly inflation rate for June 2013 was negative 0.2% compared to positive 0.2% for both April and May 2013 .The 12-month average inflation stood at 6.4% in June 2013, higher than the 12-month average of 6.1% recorded in June 2012.
According to the latest Simonis Storm inflation report, the recent rise can be attributed to food and non-alcoholic beverages, transport, recreation and culture categories of the composite. Increases were recorded in most subgroups of the food and non-alcoholic beverages category, while the 12-month inflation recorded in meat, fish and vegetables slowed by 0.1%, 0.2% and 2.1% respectively, compared to May. The increases in bread and cereal inflation on the other hand was as a result of rising global food prices due to a shortage of wheat supply in the USA and the continued dry weather conditions in Russia. According to the report, the increase in international corn and wheat prices might put pressure on staples around the world for the remainder of 2013.
The annual inflation for transport increased to 3.0% in June 2013, from 2.7% in May 2013. The boost in transport inflation was mainly due to increase of vehicles prices attributed to higher demand. The inflation for Housing, Water, Electricity, Gas and Other Fuels rose in June to 9.7% from 9.6% in the previous month. This in as upward trend seen since January 2013, and is attributed to higher inflation for water, sewerage and refuse collection with a consistent 8.9% and electricity, gas and other fuels subcategory at more than 12%.
Inflation for other categories such as recreation and culture also increased from May to June. The increase in recreation and culture resulted from higher package holidays due to seasonality as more tourist services were demanded .In contrast, the lower rate in miscellaneous goods and services was due to a fall in the prices of personal care like hair salon services and toiletries, which showed an annual decrease of 2.7% in June compared to 5.1% in May.
In conclusion the report stated, “We expect the recent depreciation of the Namibia dollar against most of its trading partner’s currencies to continue, leading to increased inflation over the short and medium term. We are likely to see this pressure initially come through on the items with short shelf-lives such as food, beverages and oil products in the short-term. Slower items are likely to be affected a little further down the road.” The report further stated that the increase in municipal services announced by the City of Windhoek will affect prices in other components and will contribute to a rise of overall inflation.