Namibians will have to dig deeper into their pockets to afford basics following a slight increase in inflation by 0.3 basis points, the latest Consumer Price Index (NCPI) released by the Namibian Statistics Agency shows.
The latest NCPI shows that food and non-alcoholic beverages are the main drivers of inflation.
Inflation surged by 5.3% in July, an increase of 1.2% from the 4.1% in the preceding month.
Currently, the inflation rate for food and non-alcoholic beverages is at 0.2% in comparison with the 0.1% recorded in the prior month.
Inflation rate for milk, cheese and eggs rose to 1.5% from -0.5, whilst for bread and cereals it rose to 1.3% from 0% in the previous month.
The group however contributed to 0.9% to the overall annual inflation rate which is 3.3%.
James Cumming, Director of Research at Simonis Storms Securities, said they still expect significant increases in food inflation with price hikes recently announced by the wheat and chicken industries, which partly came about from the new 5% import levy imposed by the Namibian Government on wheat and white maize products.
“We expect a further rise in food inflation due to rand weakness against the USD, however we might see some relief from the recent CNY (Chinese Yuan) devaluation in the form of lower import prices from China,” Cumming said.
Cumming added that the increase in water and electricity tariffs at the beginning of July 2015 will have a significant effect in this category and it carries the largest weight to impact aggregate inflation in the coming months.
Commenting on the inflation figures, Acting Statistician General, Sikongo Haihambo, said the increases in annual inflation rates were mainly due to increases in the price levels of the categories of hotels, cafes and restaurants and food and non-alcoholic beverages.
“These increased to 7.5% and 5.3% respectively, from 6% and 4.1% recorded the preceding month. The monthly inflation rate for July 2015 also increased to 0.4% from 0.3% recorded in June 2015,” Sikongo said.
The NCPI has grown by 0.4 index points from 112.3 to 112.7 during the month. The annual inflation rates for the major groups comprising the NCPI (in terms of CPI weighting) are food and non-alcoholic beverages at 5.3%; housing, water, electricity, gas and other fuels which are 2.1%; alcoholic beverages and tobacco which are 6.9% and Transport which stands at -1.8%.
Transport inflation growth on a year-on-year basis stood at -1.8%, decreasing from 112.6 to 110.7. However, on a monthly basis, the report noted that transport inflation growth remains positive at 1.4% in July 2015, higher compared to 0.6% recorded in June 2015.
The report alluded that, “slowdown was largely driven by decreases in the subgroup of operation of personal transport equipment because of petrol/diesel prices which have been showing a downward trend over the past months due to declines in the price of crude oil.”
Alcoholic beverages and tobacco inflation growth on a year-on-year basis eased to 6.9% in July 2015 lower than 7.2% seen in June 2015. The index in this category grew by 0.3 index points from 114.4 to 122.3 year-on-year.
The report also cited that for the period between July 2014 and July 2015, annual inflation decreased between 5.6% and 2.9%.
“The highest annual inflation rate recorded during the period was 5.6% recorded in July 2014, and the lowest of 2.9% was registered in April 2015,” the report noted in part.
It was further recorded that the July 2015 monthly and annual inflation rates for goods were 0.6% and 3.7%, whereas the inflation rates for services is 0.2% and 2.7%.
“Corresponding rates recorded during the same period in the previous year stood at 0.0% and 6.8% and 0.4% and 4% respectively,” the report noted.