Economic, National

Inflation decrease allows consumers to breath easier

WINDHOEK, 12 AUG.-Consumers can breathe easier for now, as the annual inflation rate for July declined to 5,4% from 6,1% recorded in June.
The slowdown was attributed to price levels of Food and non-alcoholic beverages, which dropped from 12,2 % recorded in July a year earlier to 4,3% obtained in July 2017. Alcoholic beverages and tobacco slowed from 6,6% in July 2016 to 3,6 percent in July 2017

Simonis Storm Securites Economist Frans Uusiku said overall, they see the deceleration of inflation as a reflection of pass-through effects of upside supply-side forces, specifically an increase in the production of soft commodities in Southern Africa, such as wheat.

“In effect, this is one of the active ingredients for most staple food. Alongside, we also believe that the moderate rally of the Rand against the USD has resulted into lesser-imported inflation,” Uusiku said.

Aalthough overall inflation is trending down, categories such as Hotels and Housing; and Water, Electricity and Gas continue to attract increases in price levels, to 6,1% and 9,1% respectively, compared to 5,4% and 8,2% registered during the same month of 2016.

“As for Hotels, this signifies the prevailing peak tourist season in Namibia, and therefore the associated increase in domestic spending by foreigners. While the latter indicates the general increase in the cost of utilities,” he said.

Moreover, he does not foresee further significant reductions in overall inflation going forward, thus retaining their annual inflation forecast of 6,8% for 2017 and 5,7% for 2018. –Sharma Mundingi

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