Food inflation at its highest since March 2017
The prices for food and non-alcoholic beverages in October 2020 were at the highest levels since March 2017, statistics by the Namibia Statistics Agency indicate.
During October, food inflation stood at 0.7% in and while annually, there was an increase of 7.1%, whereas in March 2017, inflation in this category was at 0.6% and annually at 7.4%.
During the month under review, the largest increases were being observed in the prices of fruits which increased by 16.1% and vegetables which increased by 14.1%, annually. Annually, the price increases in meat products and fish also remained elevated at 9.3% and 8.5% respectively.
Experts expect food inflation to slow down soon as the prospects for the Southern African region to receive normal to above-normal rainfall for the 2020-21 cropping season are currently high as La Niña conditions is expected to be sustained until at least February 2021.
Meanwhile, alcoholic beverages and tobacco was the second largest contributor to the annual inflation rate in October, with alcoholic beverages having increased at a rate of 1% monthly and 3.4% yearly, while tobacco prices rose by 3.2% monthly and 8.4% yearly.
The countries annual inflation rate remained relatively steady at 2.3% in October, following the 2.4% uptick in prices in September. IJG’s inflation model forecasts an average inflation rate of 2.2% in 2020 and 3.4% in 2021.
IJG research indicates that one of the larger risks to inflation forecast is global oil prices. While there has been an uptick in oil prices in recent weeks, the firm believes it is improbable that it would return to levels seen at the beginning of the year anytime soon as the global demand for oil remains muted, especially since several European countries are implementing renewed lockdown measures.
Furthermore, the likelihood of higher rental prices in the next 12 months also remains low, given the financial pressure many consumers are under.
“With these being the larger categories of the inflation basket, we do not foresee any sudden increases in Namibian inflation in the short-term,” IJG noted.
