Inflation: Lots of dough needed

Inflation for maize, meal and grain reached 3.0% last month, the highest it has been since March 2021.

Despite overall food inflation dropping to its lowest level in more than a year, the price monster sunk its claws deep into staple foods, the latest data of the Namibia Statistics Agency (NSA) shows. Overall food inflation in March was 4.7%, down from 5.5% the previous month and its 12-month peak of 7.7% in June 2021.

Bread and cake flour shot up to 11.9% - up from 9.1% in February and 3.8% in March 2021. Inflation for breakfast cereals came in at 4.9%, an increase of two percentage points compared to February and the highest in more than a year.

Baby foods and cereals catapulted from 6.4% in February to 10.1% last month. A year ago, the rate was 0.5%.

Consumers’ saving grace was rice, which entered its second month deflation. Last month, rice recorded a rate of -0.8% compared to 16.6% in March 2021.

OILS

March’s inflation rate for cooking fats nearly doubled from the previous month. At 36.6%, it is not only the highest in more than a year, but also a massive jump from the -2.7% of March 2021.

The rate for cooking oil was 20.3% compared to 15.8% a year ago. Inflation for margarine and margarine spread was 12.3% against -1.7% in March 2021.

“Cooking oil prices have surged globally and locally due to weather conditions negatively impacting the production of palm and soybean oil. Droughts in Brazil and Argentina and typhoons and floods in Malaysia have decreased global supply of cooking oils,” says Simonis Storm (SS).

PROTEIN

Shoppers might be surprised to learn that meat inflation not only compares very favourably to last year, but in many cases are the lowest in 12 months.

Last month, the rate for beef was 4.3% (March 2021: 12.5%), minced meat recorded 2.9% (8.8%), chicken 4.6% (19.3%), mutton 4.4% (15.5%), pork 3.5% (5.5%), and game -0.8% (4.4%).

Canned meat, however, turned up the heat with a rate of 12.8% compared to 7.7% a year ago.

Fresh and frozen fish registered a rate of 4% against 6.7% 12 months ago.

Inflation for eggs, however, rose from 2% to 8.7%.

VEGETABLES, FRUIT

The price monster had mercy when it came to vegetables and fruit.

Potatoes’ inflation rate last month 6.4%, down from 9% a year ago. Compared to February, however, it shot up from 1.7% to its highest level so far this year. The rate for pumpkin was -3.7% (March 2021: 10.5%), while onion inflation registered -1.5% (-14.6%), spinach -10.7% (6.8%), and sweet potatoes -15.7% (26.5%).

Citrus fruits inflation was 5.1% (17.6%), but the rate for apples and bananas rose to 7.3% (4.2%) and 8.7% (-2.9%) respectively.

OUTLOOK

The ongoing war in Ukraine will likely keep food prices elevated for the foreseeable future, SS says.

“Much investment is needed in the global agricultural sector in response to suppressed harvest. Different technologies and farming methods also need urgent investments if the world is to combat adverse weather conditions in future,” the analysts say.

Improved supply chain solutions and efficiency enhancing infrastructure between African countries will go a long way in lowering food insecurity in certain African states, according to SS.

“In the absence of the above, we could expect significant food shortages and rising food prices in the near future in Namibia. This could further lead to social risks, which could be avoided by observing a meaningful economic recovery with job creation focused on the bottom of the income distribution,” SS concludes.