Windhoek-The most recent Consumer Price Index (CPI) for October 2017 released by the Namibia Statistics Agency (NSA) confirms that the annual inflation rate for October 2017 dropped again after an increase last month.
The annual inflation rate for October 2017 compared to October 2016 decreased to 5.2 percent, which is the lowest annual inflation rate since December 2015 when it stood at 3.7 percent.
The monthly inflation rate, October 2017 compared to September 2017, dropped back to 0.1 percent after an increase to 0.4 percent in September 2017.
During five of the ten months this year the monthly inflation rate was 0.1 percent. Annual price increases decelerated for both services (down from 8.4 percent in September to 8.0 percent in October) and goods (down from 3.6 percent to 3.1 percent).
Commenting on the latest figures the Executive Director of the Economic Association of Namibia, Klaus Schade, said that price increases for services clearly remained the main driver of inflation accounting for 3.2 percentage points of the inflation of 5.2 percent. The category of ‘housing, water, electricity, etc.’ again recorded the highest inflation rate of the main twelve categories although price increases slowed down from 8.9 percent in September to 8.6 percent in October. It is the second lowest inflation rate for housing this year after 8.3 percent in August.
“The costs of maintenance on dwellings continue to increase at a slower pace, which could be attributed to the contraction in the construction and related industries. Prices for maintenance rose by 4.7 percent in October – the lowest since January 2014 (4.4 percent) – compared to 5.9 percent in September 2017,” Schade noted.
Meanwhile, prices for water supply grew by only 7.2 percent in October compared to double-digit figures over most of the past two years, while price increases for electricity showed some strong fluctuations over the past few months and slowed to 4.1 percent in October.
At the other end of the scale, prices for clothing and footwear dropped by 5.0 percent compared to October 2016 implying that these items were less expensive in October this year than October 2016.
Similarly, costs for communication services were also lower in October 2017 compared to the same month last year. They dropped by 0.3 percent.
“The consumer also continues to benefit from low food-price inflation. Prices for food items increased by 3.7 percent in October compared to 4.2 percent in September 2017 and 11.9 percent in October 2016.
“Bread and cereals are again less expensive than a year ago declining by 2.7 percent, while fruit (1.6 percent) and vegetable (2.1 percent) prices increased below average.
“Meat prices, however, remain under pressure increasing by 9.2 percent after an increase of 9.4 in September 2017 and 5.3 percent in October 2016. Strong price rises for meat can be explained by better grazing conditions and strong exports that compete with local demand,” Schade explained.
In addition, costs for transport rose stronger in October (4.4 percent) than in September 2017 (3.9 percent), because of increased prices for new vehicles (up by 6.5 percent compared to 3.9 percent in September).
Prices for alcoholic beverages and tobacco also rose stronger than in previous months. Prices were 5.7 percent higher in October 2017 than in October 2016.
“Overall, the current trend of the inflation rate supports our view that this year’s annual inflation rate will remain below last year’s inflation rate of 6.7 percent.
“Consumers continue to benefit from lower prices for basic food items such as bread and cereals and relatively modest increases for food items in general.
“However, inflation is expected to pick up for November due to the increase in fuel prices by 40 cents per litre for petrol and 60 cents per litre for diesel. Since transport accounts for the third largest category in the consumption basket (14.3 percent), any price increases within this category influences the overall inflation rate,” Schade said.