Windhoek-The annual inflation rate increased to 6.7 percent in April from 6.6 percent recorded during the same period last year.
The slight increase in the annual inflation rate resulted mainly from increases recorded in the annual price levels of housing, water, electricity, gas and other fuels (9.4 percent), hotels, cafes and restaurants (8.3 percent), education (7.8 percent), recreation and culture (6.9 percent), transport (6.6 percent) and miscellaneous goods and services (6.1 percent).
“The downward trend for the annual inflation rate since January 2017 is continuing and April 2017 annual inflation rate figure is the lowest in the past nine months (since July 2016).
“The April 2017 annual inflation rate happened to be equal to the average annual inflation rate of the calendar year 2016. On a month-to-month basis, the inflation rate increased to 0.3 percent, compared to 0.1 percent registered during the previous month,” said Alex Shimuafeni, statistician general and CEO of the Namibia Statistics Agency (NSA).
For the month of April, the food and non-alcoholic beverages category’s annual inflation slowed to 5.8 percent compared to 11 percent in April 2016, resulting in a decrease of 5.2 percentage points.
The decrease in food prices was recorded in the sub-components of vegetables, including potatoes and other tubers, which slowed from 23.2 percent to -1.3 percent, while fruit slowed from 20.2 percent to 0.8 percent.
Bread and cereals slowed from 14.9 percent to 0.9 and oils and fats from 15.3 percent to 6.1 percent. The monthly inflation rate for food and non-alcoholic beverages was recorded at 0.1 percent, compared to -0.6 percent registered in the previous month.
The annual inflation rate for alcoholic beverages and tobacco component stood at 3.9 percent, compared to 7.1 percent registered in April the previous year, resulting in a decline of 3.2 percentage points.
This movement emanated from a decrease in the prices of both the alcoholic beverages and tobacco subcomponents. On a monthly basis, the monthly inflation rate for this group stood at 0.4 percent, compared to 0.5 percent a month earlier.
For the month of April, the annual inflation rate for the transport group stood at 6.6 percent, indicating an increase of 3.8 percentage points as against the month of April 2016, when the annual inflation rate stood at 2.8 percent.
This increase mainly emanated from the operation of personal transport equipment subcategory, which escalated to 8.1 percent in April this year, as compared to 1.9 percent recorded in April 2016.
On a monthly basis, the inflation rate for transport stood at 0.2 percent, compared to 1.4 percent recorded a month earlier, resulting in a decrease of 1.2 percentage points. This decline was driven by decreases in the subgroup of public transportation services, which declined from 0 to -0.1 percent.
The annual inflation rate for housing, water, electricity, gas and other fuels category continues to drive the annual inflation rate, which stood at 9.4 percent in April 2017, compared to 7.5 percent recorded during the same period a year earlier.
The increase emanated from increases registered in all the sub-groups comprising the housing, water, electricity, gas and other fuels group, except for the electricity, gas and other fuels sub-component, which decelerated to 8 percent from 9.5 percent recorded during the same period a year earlier.
Inflation is calculated based on a basket of goods and services, containing a representative sample of the goods and or services commonly consumed in a country, and weighted in accordance with the relative percentage of expenditure allocated to each of the said goods at household level.
The price of these goods and services are then tracked over time to illustrate any change in the cost of living over time. As spending patterns change, new products and services are added to the basket and the basket is re-weighted, so as to better capture the current spending patterns of the consumer at the current point in time.
As such, the inflation basket is generally reconstituted every five years. In Namibia, the basket was last re-based in 2013, using household expenditure data collected in the 2009/10 Household Income and Expenditure Survey.
The basket now contains over 350 items, grouped into 12 categories and 55 sub-categories, for which prices are collected on a monthly basis from more than 900 retail outlets.
Inflation in Namibia is, however, largely determined by three categories of the overall NCPI basket, namely housing, water, electricity, gas and other fuels, food and non-alcoholic beverages and transport, which cumulatively make up just under 60 percent of the total basket.
Additionally, following the re-basing of the NCPI basket in 2013, alcoholic beverages and tobacco make up an additional 12.6 percent of the basket, meaning the four largest categories represent well over 70 percent of the total basket.
As such, a large increase in inflation in these categories has a greater impact on the overall inflation than do increases in the lower weighted categories. Thus, it is rare to see major increases in overall inflation attributed to the lower weighted categories, despite the fact that these categories may have seen relatively high inflation in their own right.