Africa-Press – Namibia. TO maintain the same level of living standards since last month and going forward, one would need to have an income that is growing at 4,4% every month.
This is because that is the rate at which the prices of goods and services have increased over the last 12 months, ending June 2022.
Data from the Namibian Statistics Agency (NSA) show the average increase in prices is sometimes above the monthly rate, which was the case for June, when inflation was recorded to be at 6%.
According to the NSA, prices are increasing at a much faster pace for goods, which stood at 8,2% for June, and at 2,2% for services.
Prices are also not the same in the regions.
Despite the central region of the country being the heart of economic productivity, the prices of goods and services here are higher at 6,2%, more than the country’s overall inflation rate.
The northern regions remain the most affordable to live in, with inflation recorded at 5,6%.
Coincidentally, the southern regions also recorded a 5,6% inflation rate.
Announcing the figures yesterday, the NSA’s statistician general, Alex Shimuafeni, said for June 2022 the annual inflation rate stood at 6%, compared to 4,1% recorded in June 2021.
He said this was the highest rate recorded since July 2017.
The main contributors to the annual inflation rate for June 2022 were transport (2,7 percentage points), food and non-alcoholic beverages (1,3 percentage points), alcoholic beverages and tobacco (0,8 percentage points), housing, water, electricity, gas, and other fuels, and furnishing, household equipment and routine maintenance of the house each contributed 0,4 percentage points.
The highest change in the annual inflation rate were mainly witnessed in the categories of, transport (18,6%), hotels, cafes and restaurants (8,6%), furnishings, household equipment and routine maintenance of the house (7,1%), food and non-alcoholic beverages (7%), and alcoholic beverages and tobacco (5,8%).
Simonis Storm Securities analyst Theo Klein says Namibia has persistently recorded lower annual inflation rates in recent months, compared to other African countries, emerging markets and advanced economies.
He says June’s high inflation rate is starting to clearly show that rising input costs are filtering through to higher consumer prices.
Klein is, however, sceptical about the 6% rate, saying average price increases may be more.
“With merchandise goods being more obligatory budget expenses (e.g. food, fuel, etc.) compared to services, which are more discretionary budget expenses (e.g. travel, tourism, entertainment, etc.), the 6,7% average goods inflation is likely closer to the reality on the ground for what the average Namibian is experiencing,” he says.
The future looks bleak too, especially with the United States (US) dollar appreciating.
“The US dollar is at a 20-year high, and this will make it more expensive to buy commodities and raw materials that are priced globally in US dollars. Although commodity prices are expected to moderate for the rest of 2022, the stronger US dollar – and weaker rand as a result – will likely keep merchandise goods inflation elevated going forward.
“We therefore expect goods inflation to persist above 7% in coming months, lifting overall inflation rates likely above 6% at the same time,” says Klein.
The war in Ukraine also remains a persistent risk, he says, adding that there is a risk that developments in that country could spill over into Namibia’s cost-of-living crisis.
It is expected that supply chains are likely to remain expensive in 2023 even if the war in Ukraine ends during 2022, as it would take time to repair damaged or destroyed transport infrastructure.
“This will be one of many factors keeping inflation elevated in advanced economies and Namibia in 2023. We are not of the view that inflation in advanced economies will drop back to central bank targets (mostly 2%) next year, for other reasons as well,” he says.
The effect of these rising inflation rates used to have negative social impacts in the past when looking at certain countries.
“Without pro-poor economic growth and a meaningful increase in job creation in the very short run, we expect crime and frustration among the most vulnerable to be on the incline,” Klein says.
The monthly data is available from the NSA.
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