Inflation ticks lower in August
Namibia’s inflation slowed to 3.4% in August on the back of a 4% increase in prices seen in July, the latest data by the Namibian Statistics Agency shows.
Transport and food & non-alcoholic beverages accounted for most of the 3.5% increase in prices during the month under review. Inflation of food and non-alcoholic beverages slowed from 6.1% in July to 5.2% in August, while prices for transport decreased by 1.6% in August.
Simonis Storm Securities economist, Theo Klein noted that only four out of twelve categories that make up the Namibia consumer price index recorded negative monthly percentage changes. This includes food, water & electricity, transport and alcohol & tobacco.
However, Klein said, given the index weights and associated negative price growth in the transport and alcohol and tobacco categories (combined weight of 36.8%), the positive price growth in the food and water & electricity categories (combined weight of 40.4%) were outweighed, pulling down the annual inflation rate.
“Consumers can expect higher spare part prices at local workshops due to global supply constraints in the shipping industry. This problem is not expected to disappear in the near future, so prices of any imported products will remain elevated in the coming months. Meat prices (more specifically beef and lamb prices) are expected to remain on an upward trend given supply shortages in ewe stock for farmers who want to upscale their farming operations and lower cattle marketing activity taking place in Namibia,” Klein stated.
IJG researchers further warned that while the August inflation rate is in line with their forecast, risks remain to the upside, with the Delta variant threatening to slow economic growth in much of the world, coupled with microchip shortages threatening the global supply of tech products and new vehicles as well as escalating shipping costs.
“However, significant price shocks are unlikely to materialise in short term given that businesses are unlikely to raise prices as consumer confidence and disposable income both remain low,” IJG noted.
IJG’s inflation model currently forecasts average inflation of 3.4% in 2021 and 3% in 2022, while Simonis Storm Securities maintains its annual inflation forecast at 3.5% for 2021.