The increasing price of basic staples such as wheat, maize meal, pasta and rice in Namibia is no surprise.
These are the views of local economists after Namib Mills announced that it would be increasing food prices on Thursday.
According to Namib Mills, the prices of wheat, pasta, bread, rice, maize meal, rice, and sugar will go up from 25 April 2022.
Namib Mills said that the main driver in the price spike is the Russia-Ukraine conflict.
Speaking to The Villager on Thursday, Cirrus Capital economist Robert McGregor says the food increases comes as no surprise and are understandable.
“Given the upwards pressure faced by global fuel prices and the global increase, it is expected,” he said.
McGregor said that is happening due to harvest concerns in other parts of the region, such as South America.
“South America is facing adverse weather conditions,” he said.
However, McGregor said this is terrible news for consumers in Namibia.
“Especially those in the low-income hustle, as they tend to spend a large proportion of their incomes on these goods,” he added.
He said Namibia’s high unemployment rate worsens the situation.
“We have seen large scale unemployment in the last few years driven by COVID-19 and a slow economic recovery and weak wage adjustments.”
Simonis Storm economist Theo Klein said the invasion of Ukraine has intensified the prices increases of food globally.
“Yet to date wheat prices are up 49% in US dollars and sugar up 2% in US dollars.”
He said it was just a matter of time before the global price increase would filter through the local markets in Namibia.
“Namibia remains a net input of the raw materials used to produce these food products.”
So Namibia is vulnerable to what happens to global food prices.
The strongest rand has most likely limited the food price increases to an extent.
“But if we continue to see rising or alleviating global food prices, we expect further increases in food products within Namibia for the rest of 2022.”
He further said Namibia increased its inflation forecast from 4.7% to 6.1% this year.
“This was as a result of fuel prices but also high food prices.”
He said food prices are seen as the second most significant driver of inflation for the year.
“Global rice prices are up to 28% in US dollars in the last 12 months.”
In its statement, Namib Mills said various factors influenced the decision to increase food prices.
“This is including rising transportation costs, supply chain disruptions and rising commodity prices such as maize and wheat,” it read.
However, the Ukraine-Russia conflict was a crucial factor in the price increase.
“This represented around 10% and 20% of global wheat production and nearly 30% of all wheat exports from these countries.”
It further added that China faces the worst wheat crop in decades after severe flooding is a contributing factor.
“China is planning to buy much more of the world’s dwindling wheat supply.”
Moreover, it says the global wheat has increased by 93% over 12 months and 43% last month.
“This has led to an increase in the landed cost of raw wheat and all wheat-based products.”
This is the third price increase on staple food products the company has announced in about a year.
In August last year, Namib Mills price increases included 4 per cent for rice, 3 per cent for sugar, 2 per cent for mahangu, 6 per cent for Polana Pasta and 3 per cent for bread, among