By:Nghiinomenwa-vali Erastus
Contrary to the central bank’s theoretical motives to contain inflation by increasing the cost of money (repo rate), the prices of goods in the domestic market have either been increasing or steady.
The last time annual inflation has been below 6% was March 2022, and for January 2023, average prices of goods have moved up to 7%- highlighting the cost of living in the country that imports most of its daily basis.
While on the other side, as households scramble for coins, the monetarists are making money as expensive as possible, since December 2021 to date the cost of money has been increased by 300 basis points.
The latest inflation figures as prepared by the Namibia Statistics Agency (NSA) have indicated prices of goods and services, especially food and electricity, had shoot up by the end of January 2023.
The annual inflation rate stood at 7.0% pushed by the annual inflation rate for goods which was estimated at 9.8%, which is at the upper bound of the SADC target.
The index that tracks the prices of households mostly consumed basket of goods and services indicated that, on 12 monthly bases, the prices have been going up by 7% or slightly more since August 2022.
Year on year for the past six months the prices of goods and services have been raising by between 6.9%-7.3%.
According to the January 2023 consumer index, food items and electricity, gas, and other fuels are items in the consumer basket that are causing pain and reducing the quality of life for many Namibians.
Food and non-alcoholic beverages, which accounts for 16.5% of the consumer price basket, registered an annual inflation rate of 14.0% during the period under review, compared to 5.6% during the corresponding period of 2022.
Monthly basis, price levels for this category increased by 2.4% during January 2023 compared to 2.2% recorded during the preceding month.
This is above the whole basket of goods and services monthly changes of 1.1%.
Zooming in the food sub-category alone which accounts for 14.8% of the consumer basket or expenditure, the sub-category is the one that took up consumers’ disposable income for the month of January 2023 through price changes.
Since the pandemic, oil and fats products have been causing havoc in households’ disposable income with constant price increases.
However, The Villager’s observations found that for December 2022 and January 2023, all food subcategories have collectively experienced high price changes.
The main products that experienced price hikes were bread and cereals, which account for the highest weight of food items that consumers purchase. Having a weight of 4.8%, this means any price increase in any of the two products causes discomfort to the consumers.
Bread and cereal are followed by meat (3.5%); sugar, jam, honey, syrups, chocolate, and confectionery (1.4%); vegetables, milk, cheese and eggs (1.2%) each as the most consumed.
Bread and cereals annual prices increased by 22.3% during January 2023 compared to 3.8% recorded in the same period of the preceding year.
According to NSA, the rise in the annual inflation rate for the food sub-category resulted mainly from increases in the price levels of maize, meal/grain (from -0.3% to 37.2%); mealie, rice/malt (from 0.6% to 19.2%).
Bread, cake flour (from 9.4% to 27.1%), and macaroni, spaghetti and noodles (from 6.1% to 18.9%).
Furthermore, the price levels of vegetables increased by 14.2% in January 2023 compared to an inflation rate of 1.8% recorded during January 2022.
The increase in the annual inflation rate for vegetables was mainly observed in the price levels of green pepper/paprika (from -12.1% to 77.0%); cucumber (from -13.3% to 51.1%); onion (from 0.3% to 40.7%); cabbage (from –16.0% to 11.4%) and carrots (-6.7% to 12.8%).
Another category that is causing deterioration in living standards is housing and energy commodities.
Since January 2022, maintenance of dwellings has been driving inflation for housing, and water, electricity, gas, and other fuels categories.
However, that changed in September 2022, the subgroups of electricity, gas, and other fuels started experiencing huge annual price increases and from November 2022, the subcategory has been the component with the highest annual price changes.
For January 2023, the prices for electricity, gas, and other fuels increased from -0.2% to 5.9%.
The housing, water, electricity, gas, and other fuels component is very significant to consumers as it accounts for 28.4% of the consumer basket.
For January the category’s prices increased by 2.7% during January 2023 compared to 1.3% registered in January 2022.
The monthly inflation for this category recorded an increase of 1.7% compared to a deflation of 0.2% recorded a month earlier- this is a big increase above the whole national basket price change.
The Monetary Policy Committee of the Bank of Namibia increased their inflation forecast to 5.3% for 2023, from 4.9% at their last meeting in November 2022- symbolizing that price hikes are not subsiding soon.
Email: erastus@thevillager.com.na
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