WINDHOEK, Aug. 15 – Namibia’s 2017 annual inflation rate will drop lower than the 6,7% rate seen in 2016 because of the current trend in the inflation rate, which dropped to 5,4% in July compared to the preceding period.
The Economic Association of Namibia (EAN) says the dropping inflation rate is good news for both consumers as well as government.
EAN Executive Director Klaus Schade said the continuing slowdown in food price inflation is good news for the poorer households that spend the largest share of their income on food.
“However, future prices for maize at the South African Futures Exchange (Safex) suggest that we can expect slight price increases towards the end of the year, while wheat prices are expected to drop,” he said.
Schade also said that inflation continued its downward trend that started in February 2017, when inflation declined from 8,2% in January to 7,8% in February.
“No inflationary pressure was recorded compared to June 2017. The month-on-month inflation rate stood at 0,0% as Namibia experienced the slowest price increases since January 2016. Food and beverage prices increased at one of the slowest rates since June 2015. Prices increased by 4,3%,” he said.
He noted that prices for some food items actually declined, such as Bread and cereals standing at -0,6% and Vegetables at -1,8%. Meanwhile, price increases for meat slowed down from 8,9% in June to 7,9% in July.
Meat prices displayed one of the highest price increases among food items compared to last year when farmers sold livestock because of the drought. Schade noted that the category for ‘Housing, water, electricity and so forth’ was the main driver of inflation with an annual inflation rate of 9,1%.
“This category accounts for the largest share of the consumption basket (28,4%) and hence, has a strong influence of the overall inflation rate. Rental payments increased by the largest margin in July – 9,6% followed by Water supply and sewerage – 9,4%. Electricity prices increased by 6,9% compared to July 2016,” he noted.
Transport inflation has come down again to 2,4%, the lowest level since May 2016 (1,5%). However, prices for health services rose at the slowest pace since January 2016 standing at 5,4% compared to 5,3%.
Price increases for the category ‘Housing, water, electricity, and so forth’ remained on the same level as in May, namely at 9,8%.- Sharma Mundingi