By: Staff writer
Food and non-alcoholic beverages were the two main contributors to Namibia’s annual inflation rate for February 2023, increasing to 7.2% compared to the 4.5% recorded in February 2022.
Researchers at High Economic Intelligence (HEI) argue that the increase in the food and non-alcoholic beverages component was mainly driven by an increase in the price levels of fruits, bread and cereal accounting for 26.8% and 22%, respectively.
“The rise in food prices was attributed to the hike in the prices of various products, such as maize meal, flour, pasta, among others, by Namib Mills on November 14, 2022. For instance, a 10kg bag of maize meal that previously cost around N$110 now costs approximately N$150.”
Namib Mills’ price increase in November was the fourth price increase on staple food products the company had announced in about a year and a half, citing the Russia-Ukraine conflict a reason.
Economists and income grant advocates at the time forecasted that those in the low income bracket would feel the biggest pinch with the rise in prices as they spend the bulk of their income on these goods.
“In February 2023, the annual inflation rate for the miscellaneous goods and services category, comprising 5.4% of the consumer basket, rose by 7.0%, which is considerably higher than the 0.9% recorded in February 2022. The surge in miscellaneous goods and services can be attributed to the heightened demand for new policies in the general liability and riot/strike classes of insurance, which led to the implementation of new policies,” the HEI researchers argued.
On a monthly basis, Namibia recorded an inflation rate of 0.4% in February 2023 compared to 1.1% recorded in January 2023.
Meanwhile, the financial researchers at Simonis Storm Securities agree that while food and non-alcoholic beverages rank second in the consumer price basket (first is housing), they contribute the most to the annual inflation which is at 36.4%.
“A similar pattern is observable with transport, which constitutes 14.3% of the basket and accounts for the second-highest contribution of the change in inflation – at 20.6% – in February 2023. These findings underscore the profound impact of food inflation remaining the leading driver of inflation,” Simonis Storm said.
Meanwhile, for the hospitality, restaurant and tourism sector, which has seen a 5.4% increase in February, the economists say that the inflation in this sector was driven by accommodation services, which increased by 6.8% y/y in February 2023 (compared to 6.7% y/y January 2023), while catering has increased by 4.1% y/y (compared to 3.8% y/y January 2023).
“Despite the large drop in hospitality prices during January 2023, we expect more price increases in this sector. This adjustment is expected to take advantage of the expected increase in tourist arrivals and to help stabilise the tourism sector’s revenues to pre-Covid-19 levels. Indeed, game drive, lodge menus and room rates are all likely to increase going forward as hospitality establishments battle rising costs,” Simonies Storm said.
