Price monster creeps up on consumer

Jo-Maré Duddy – Overall food inflation last month cooled off to 5.5% on an annual basis, the lowest since June 2020, but still more than double the 2.1% reported in January 2020.

Data released by the Namibia Statistics Agency (NSA) shows only two items in the food basket recorded a higher year-on-year (y/y) inflation rate compared to December. The rate for oils and fats in January was 12.4% against 12.2% the previous month. Coffee, tea and cocoa rose from 3.2% to 4.6%. A year ago the inflation rates were 0.2% for oils and fats, and 4.3% for coffee, tea and cocoa.

Welcome news for consumers is January’s y/y rate of -0.3% for fish. This is the first time since July 2019 that fish is back in deflationary territory. It started 2020 with 7.9%, peaked at 9% in September and ended last year at 6.4%.

Apart from oils and fats, only meat and fruit recorded double-digit y/y inflation rates last month. Meat’s rate was 10.2%, down from 11.7% in December, but drastically up from the -0.5% of January 2020. The rate for fruit was 13.6%, lower than the 17.7% of December and the 13.8% a year ago.

Y/y rates for other items in the food basket were: bread and cereals 2.4% (5.7% in December and 0.3% in January 2020); milk, eggs and cheese 2.3% (1.6% and 3.6%); vegetables 5.9% (8.7% and 8.4%); as well as sugar, jam, honey and sweets 3.7% (8.8% and 1.9%).

Food and non-alcoholic beverages is the second most important item in the Namibian consumer basket. The average consumer spends N$16.45 out of every N$100 on this.

RENT SURPRISE

The heavyweight in the national consumer basket is housing, water, electricity, gas and other household fuels. On average, consumers spend 28.36% of their money on this.

January’s annual inflation rate for housing, water, electricity, gas and other household fuels was 1.0% - up from -1.3% the previous month and -1.2% a year ago.

This is the first time since September 2019 that the category is back in positive territory.

Last month’s increase was mainly driven by rental payments, which recorded a y/y rate of 0.6% compared to -1.5% in January 2020. Inflation for rental payments was -2.3% for the rest of 2020.

Commenting on the figures, Cirrus Securities said as rental payments account for 23.3% of the consumer basket, the change from deflation to inflation in rental payments will see annual inflation increase this year.

However, the analysts added: “Inflation in the rental payments line is difficult to reconcile with anecdotal evidence, particularly as household incomes remain strained offering little scope for increases, and interest rates have decreased materially compared to a year ago. The NSA may revisit the rental payment inflation in the next few months.”

January’s inflation rates for other sub-items in the category for housing, water, electricity, gas and other household fuels were: regular maintenance and repairs 4.2% (3.2% in December and 4.2% in January 2020); water supply, sewerage service and refuse collection 3.2% (3.2% and 3.8%), as well as electricity, gas and other fuels 2.3% (2.1% and -1.0%).

EDUCATION, TRANSPORT

January’s annual inflation rate for education was 1.8%, a huge drop from 7.0% the previous month and the 5.7% recorded a year ago.

Cirrus attributed the fall to schools finding it difficult to pass through large fee adjustments without reducing placements. Last month’s rate is the lowest annual rate since January 2003, Cirrus said.

Overall transport inflation in January spent its fourth consecutive month in deflation, registering -0.9%. In December it was -1.3% and a year ago 5.0%.

Deflation was driven by the sub-category, “operation of personal transport equipment", which includes the fuel price. It recorded a y/y rate of -4.7%, up from -4.9% in December, but significant lower than the 6.1% in January 2020.

January’s annual inflation rates of other categories were: alcoholic beverages and tobacco 5.0% (4.3% in December and 2.6% in January 2020); clothing and footwear -5.7% (-6.0% and -0.7%); furnishings and household equipment 4.1% (3.9% and 2.9%); health 3.7% (2.8% and 3.1%); communication 4.1% (4.3% and 0.7%); recreation and culture 4.9% (3.9% and 4.3%); as well as hotels, cafes and restaurants 1.2% (0.1% and 1.1%).

The annual overall inflation rate in January was 2.7%, slightly higher than the 2.4% of the previous month and the 2.1% recorded a year ago. However, it was the highest rate since October 2019.