Windhoek residents face relatively high prices
Paying more for the same quantity
Overall, the prices of goods and services in Namibia increased by 5.4% in May 2022, compared to 3.8% recorded in May 2021.
PHILLEPUS UUSIKU
Even though Namibian consumers in general are facing high commodity prices, it is worse for Windhoek residents.
Statistics released by the Namibia Statistics Agency (NSA) indicated that Zone 2 (Windhoek) has been recording the highest inflation rates since the beginning of the year.
Between January 2022 and May 2022, inflation averaged 5.7% in Windhoek. More specifically, inflation in the capital city of Namibia stood at 6.3% in May 2022.
The increase was mainly because of increases recorded in the price levels of transport (from 5.6% to 18.3%), furnishing, household equipment and routine maintenance of the house (from 4.8% to 14.4%), housing, water, electricity, gas and other fuels (from 0.5% to 2.6%) and hotels, cafés, and restaurants (from -0.6% to 10.8%), NSA pointed out.
With regard to Zone 1 (Kavango East, Kavango West, Kunene, Ohangwena, Omusati, Oshana, Oshikoto, Otjozondjupa, and Zambezi), between January 2022 and May 2022, inflation averaged 4.3%. The northern regions recorded in an inflation rate of 4.8% during May 2022.
Moreover, Zone 3 (//Kharas, Erongo, Hardap and Omaheke), inflation averaged 4.7% since the beginning of the year and stood at 5.1% in May 2022.
Overall, the prices of goods and services in Namibia increased by 5.4% in May 2022, compared to 3.8% recorded in May 2021, an increase of 1.6 percentage points. In April 2022, inflation stood at 5.6%.
Transport, food and non-alcoholic beverages categories continue to be the biggest drivers of inflation. Transport recorded an inflation rate of 16.7%, while food and non-alcoholic beverages registered an inflation rate of 6.6% in May 2022.
The main driver of transport inflation was fuel, which recorded an increase of 24.4%.
As for the food and non-alcoholic beverages category, the three main drivers of inflation were oil and fats (27.4%), fruit (16.5%) and bread and cereals (6.8%).
Outlook
Commenting of the ‘price monster’ statistics, IJG Securities said the Ministry of Mines and Energy’s decision to increase fuel prices again in June negates the fuel levy relief granted and will result in even higher fuel prices in August should the reduction in fuel levies not be extended beyond July.
The Monetary Policy Committee (MPC) of the Bank of Namibia noted in its announcement that it will continue to monitor developments in inflation to ensure price stability in the interest of the sustainable economic development of the country. IJG’s inflation model currently forecasts inflation to average between 5.0% and 6.2% in 2022.
According to PSG Wealth, “we expect transport price inflation will likely remain near double digits throughout most of the year. The respite from reduced levies on fuel products in May was short-lived, as petrol prices were raised by N$2.5 per litre in June. As a result, domestic petrol prices are now N$4.75 per litre (55%) higher since the start of the year. Additionally, the prices of wheat, maize, seed oils, and fertilisers have surged in the wake of the 2022 Russian invasion of Ukraine, which continues to exert upward pressure on food price inflation. We recently raised our average inflation forecast for 2022 to 5.3% year-on-year from 4.7% previously,” PSG said.
Moreover, Cirrus Capital noted that despite the pump price relief in May 2022, transport inflation was still the primary driver of inflation. May petrol prices were 36.1% higher year-on-year, while diesel (50ppm) prices were 51.4% higher year-on-year, although somewhat less extreme than the month before.
Global oil prices remain elevated, given challenges to global production. Future pricing suggests expectations of prices weakening into year-end and averaging below USD100/bbl in 2023 for both Brent crude and WTI. Risk-off sentiment has seen the rand weakening in recent weeks, which puts further pressure on domestic prices, Cirrus said.
“Globally, services inflation is on the rise as consumers switch to travel and tourism amongst other services as the world learns to live with the virus. However, locally, we expect goods inflation to be higher than services inflation as a result of expensive supply chains, elevated fuel prices and a weaker Rand exchange rate. We expect to see inflation consistently coming in higher than 5% in coming months. We maintain our forecast of 7.1% for 2022,” Simonis Storm said. m [email protected]
Even though Namibian consumers in general are facing high commodity prices, it is worse for Windhoek residents.
Statistics released by the Namibia Statistics Agency (NSA) indicated that Zone 2 (Windhoek) has been recording the highest inflation rates since the beginning of the year.
Between January 2022 and May 2022, inflation averaged 5.7% in Windhoek. More specifically, inflation in the capital city of Namibia stood at 6.3% in May 2022.
The increase was mainly because of increases recorded in the price levels of transport (from 5.6% to 18.3%), furnishing, household equipment and routine maintenance of the house (from 4.8% to 14.4%), housing, water, electricity, gas and other fuels (from 0.5% to 2.6%) and hotels, cafés, and restaurants (from -0.6% to 10.8%), NSA pointed out.
With regard to Zone 1 (Kavango East, Kavango West, Kunene, Ohangwena, Omusati, Oshana, Oshikoto, Otjozondjupa, and Zambezi), between January 2022 and May 2022, inflation averaged 4.3%. The northern regions recorded in an inflation rate of 4.8% during May 2022.
Moreover, Zone 3 (//Kharas, Erongo, Hardap and Omaheke), inflation averaged 4.7% since the beginning of the year and stood at 5.1% in May 2022.
Overall, the prices of goods and services in Namibia increased by 5.4% in May 2022, compared to 3.8% recorded in May 2021, an increase of 1.6 percentage points. In April 2022, inflation stood at 5.6%.
Transport, food and non-alcoholic beverages categories continue to be the biggest drivers of inflation. Transport recorded an inflation rate of 16.7%, while food and non-alcoholic beverages registered an inflation rate of 6.6% in May 2022.
The main driver of transport inflation was fuel, which recorded an increase of 24.4%.
As for the food and non-alcoholic beverages category, the three main drivers of inflation were oil and fats (27.4%), fruit (16.5%) and bread and cereals (6.8%).
Outlook
Commenting of the ‘price monster’ statistics, IJG Securities said the Ministry of Mines and Energy’s decision to increase fuel prices again in June negates the fuel levy relief granted and will result in even higher fuel prices in August should the reduction in fuel levies not be extended beyond July.
The Monetary Policy Committee (MPC) of the Bank of Namibia noted in its announcement that it will continue to monitor developments in inflation to ensure price stability in the interest of the sustainable economic development of the country. IJG’s inflation model currently forecasts inflation to average between 5.0% and 6.2% in 2022.
According to PSG Wealth, “we expect transport price inflation will likely remain near double digits throughout most of the year. The respite from reduced levies on fuel products in May was short-lived, as petrol prices were raised by N$2.5 per litre in June. As a result, domestic petrol prices are now N$4.75 per litre (55%) higher since the start of the year. Additionally, the prices of wheat, maize, seed oils, and fertilisers have surged in the wake of the 2022 Russian invasion of Ukraine, which continues to exert upward pressure on food price inflation. We recently raised our average inflation forecast for 2022 to 5.3% year-on-year from 4.7% previously,” PSG said.
Moreover, Cirrus Capital noted that despite the pump price relief in May 2022, transport inflation was still the primary driver of inflation. May petrol prices were 36.1% higher year-on-year, while diesel (50ppm) prices were 51.4% higher year-on-year, although somewhat less extreme than the month before.
Global oil prices remain elevated, given challenges to global production. Future pricing suggests expectations of prices weakening into year-end and averaging below USD100/bbl in 2023 for both Brent crude and WTI. Risk-off sentiment has seen the rand weakening in recent weeks, which puts further pressure on domestic prices, Cirrus said.
“Globally, services inflation is on the rise as consumers switch to travel and tourism amongst other services as the world learns to live with the virus. However, locally, we expect goods inflation to be higher than services inflation as a result of expensive supply chains, elevated fuel prices and a weaker Rand exchange rate. We expect to see inflation consistently coming in higher than 5% in coming months. We maintain our forecast of 7.1% for 2022,” Simonis Storm said. m [email protected]
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