Economy registers highest monthly price-hike
The inflation rates for both goods and services increased in September 2018, the Namibia Statistics Agency has announced at the release of the consumer price index.
Experts have reacted by stating that as expected, the combined effect of higher fuel prices and fares for public transport services is exerting upward pressure on the inflation rate.
On a month-to-month basis, inflation accelerated from 0.03% in August to 0.8% in September making it the highest month-on-month inflation rate after a 1.6% rise in January 2018.
Price rises for goods remained the key driver for the higher inflation rate and they rose by 4.9% in September compared to 4.6% in August.
Prices for services increased by 4.7% compared to 4.1% in August while prices for both categories accelerated at the fastest pace this year.
The inflation rate for goods exceeded the inflation rate a year ago (3.6%), yet the inflation rate for services remained below last year’s inflation rate of 8.4%.
The strong increase in public transportation fares that resulted in an inflation rate of 18.0% compared to September 2017 was the main driver behind the rise in service inflation.
The transportation fare increase contributed 0.4% to the increase in service inflation or two third of the overall increase.
After a decline of 2.7% in August, prices for milk, cheese, and eggs eased by 0.6% in September.
It is the third consecutive month of price declines; something Namibian consumers have not experienced since the end of 2010 and beginning of 2011.
Fruit prices jumped by 15.3% in September 2018 compared to September 2017 after an increase of 7.9% in the previous month.
It is the highest fruit price inflation since January 2017 (15.8%).
Prices for vegetable rose by 5.2% after increases by 6.0% and 8.0% in August and July 2018, while prices for sugar, jam etc. continued the downward trend and dropped by 2.5% - the largest decline so far this year.
This four category account for about a quarter of the food price inflation.
Prices for alcohol and tobacco increased at different paces as price increases for housing, water and electricity slowed down to 3.8% after an increase by 4.4% in August.
Transport inflation provided the main push for the higher inflation rate.
Transport inflation rose from 9.7% in August to 12.9% in September. It is the highest inflation rate for this category since 2010.
Since transport contributes 14.3% to the overall inflation rate, this increase by 3.2 percentage points translates into an overall increase in the inflation rate by 0.5 percentage points.
Without price declines or below average price increases in other categories, the inflation rate would have been even higher due to price rises for transport.
Said economist Klaus Schade, ‘Namibia currently experiences only the direct impact, but higher transportation costs will have an impact on the prices of other goods soon – so-called second-round effects.”
“Furthermore, the weaker currency compared to a year ago, even so, it has gained some ground again since the middle of September, will result in higher prices for goods imported from outside the rand area. Sourcing goods to the extent possible locally will protect producers and consumers from increasing transportation costs and a weaker currency. Furthermore, both consumers and producers need to use transport equipment more efficiently.”
Schade advised that motorists need to explore alternative modes of transport (non-motorised transport, car sharing, etc.) and move to electric vehicles that can be charged from locally available, renewable energy sources.
“In the meantime, however, consumers have to tighten the belt, not only because of rising price levels but also because of a tight labour market,” he said.