Transport to keep price monster elevated
Buckle up, budget wisely
The increase in fuel prices will have ripple effects on other goods and services.
Namibian consumers in general, especially those that experienced salary cuts or were retrenched due to the Covid-19 pandemic, are likely to be feeling the pressure on their pockets as prices of goods and services continue to escalate.
In addition, the Russia-Ukraine unrest could worsen the situation due to supply disruptions, analysts warned. Russia is one of the biggest oil producers in the world.
Fuel prices, an essential input in various industries of the economy, already increased twice this year to its record high level and is expected to continue rising in the coming months, leading to further increases in the prices of other goods and services.
According to the Namibia Statistics Agency (NSA), for the month of February 2022, overall annual inflation stood at 4.5%, an increase 1.8% percentage points when compared to 2.7% recorded in February 2021.
On a monthly basis, Namibia recorded an inflation rate of 0.2% in February 2022 compared to 1.1% obtained during the past month.
Inflation was mainly driven transport (1.8 percentage points), food and non-alcoholic beverages (1.0 percentage points), alcoholic beverages and tobacco and furnishing, household equipment and routine maintenance of the house each contributed (0.5 percentage points), housing, water, electricity, gas, and other fuels (0.3 percentages points) and recreation and culture, education and hotels, cafes and restaurant each contributed (0.1 percentage points), NSA pointed out.
The operation of personal transport equipment category, which captures fuel, recorded an inflation rate of 18.5% compared to a deflation of 3.0% recorded in February 2021. The transport category accounts for 14.3% of the consumer basket.
Furthermore, prices of essential food items such as vegetables, fruits, fish, oil and fats increased by 5.1%,12.6%, 3.9% and 13.4%, respectively. The food and non-alcoholic beverages category accounts for 16.5% of the consumer basket.
Agriculture
The Agricultural Bank of Namibia recently pointed out that high dependence on food imports in Namibia remains a concern due to rising external uncertainties such as geopolitical tensions coupled spurring energy prices. This has an important implication for high costs of living and high cost of production across industries, including the agriculture sector. There is great need to increase the local procurement of food produce, the bank said.
Meanwhile, Theo Klein, economist at Simonis Storm, notes that Namibia has experienced significant annual price increases in some of the food products in which Ukraine is a large global producer or exporter of. For example, cooking oil prices have increased by 21.4% on average in Namibia in the last year alone. Food production and exportation in Ukraine is likely to be disrupted with the ongoing resistance battle against Russia. This will severely impact global food production and has significant food security risks to North African countries who greatly rely on Ukraine’s food exports. Namibia can expect to see higher prices in bread, corn, baking flours, honey, beverages in aluminium cans, cheese, cooking oils and many other products, Klein said.
Moreover, Namibia currently does not have any barley producing operations and therefore remains vulnerable to global barley prices, this could lead to an increase in beer production costs and ultimately higher consumer prices for different beer products, Klein added.
“With the above-mentioned risks to global food prices, it could be that local inflation in Namibia surprises to the upside and surpasses our forecast of 4.7% for 2022.”
Zones
With regard to the zones, Zone 2 (Windhoek) recorded the highest inflation rate of 5.3% and remained steady from the previous month.
In addition, Zone 3 (//Kharas, Erongo, Hardap and Omaheke) recorded the second highest inflation rate of 4.1%, while Zone 1(northern region) recorded an inflation rate of 3.9% in February 2022.
Inflation in Zone 1 mainly emanated from increases in the price levels of transport (from 1.6%to 12.5%), hotels, cafés and restaurants (from 2.7% to 6.4%), education (from -1.3% to 1.8%) and food and non-alcoholic beverages (from 5.0% to 5.4%), NSA said.
For Zone 2, the increase was mainly due to increases witnessed in the price levels of transport (from -0.4% to 13.8%), cafés, and restaurants (from -2.0% to 11.5%) and furnishing, household equipment and routine maintenance of the house (from 4.1% to 13.6%).
Lastly, the increase in the annual inflation rate for Zone 3 resulted mainly from increases in the price levels of transport (from -1.3% to 13.4%), furnishing, household equipment and routine maintenance of the house (from 1.5% to 5.0%), education (from 0.8% to 7.0%), hotels, cafes, and restaurants (from -1.2% to 3.6%) and clothing and footwear (from -3.8% to 0.4%), the agency said. [email protected]
In addition, the Russia-Ukraine unrest could worsen the situation due to supply disruptions, analysts warned. Russia is one of the biggest oil producers in the world.
Fuel prices, an essential input in various industries of the economy, already increased twice this year to its record high level and is expected to continue rising in the coming months, leading to further increases in the prices of other goods and services.
According to the Namibia Statistics Agency (NSA), for the month of February 2022, overall annual inflation stood at 4.5%, an increase 1.8% percentage points when compared to 2.7% recorded in February 2021.
On a monthly basis, Namibia recorded an inflation rate of 0.2% in February 2022 compared to 1.1% obtained during the past month.
Inflation was mainly driven transport (1.8 percentage points), food and non-alcoholic beverages (1.0 percentage points), alcoholic beverages and tobacco and furnishing, household equipment and routine maintenance of the house each contributed (0.5 percentage points), housing, water, electricity, gas, and other fuels (0.3 percentages points) and recreation and culture, education and hotels, cafes and restaurant each contributed (0.1 percentage points), NSA pointed out.
The operation of personal transport equipment category, which captures fuel, recorded an inflation rate of 18.5% compared to a deflation of 3.0% recorded in February 2021. The transport category accounts for 14.3% of the consumer basket.
Furthermore, prices of essential food items such as vegetables, fruits, fish, oil and fats increased by 5.1%,12.6%, 3.9% and 13.4%, respectively. The food and non-alcoholic beverages category accounts for 16.5% of the consumer basket.
Agriculture
The Agricultural Bank of Namibia recently pointed out that high dependence on food imports in Namibia remains a concern due to rising external uncertainties such as geopolitical tensions coupled spurring energy prices. This has an important implication for high costs of living and high cost of production across industries, including the agriculture sector. There is great need to increase the local procurement of food produce, the bank said.
Meanwhile, Theo Klein, economist at Simonis Storm, notes that Namibia has experienced significant annual price increases in some of the food products in which Ukraine is a large global producer or exporter of. For example, cooking oil prices have increased by 21.4% on average in Namibia in the last year alone. Food production and exportation in Ukraine is likely to be disrupted with the ongoing resistance battle against Russia. This will severely impact global food production and has significant food security risks to North African countries who greatly rely on Ukraine’s food exports. Namibia can expect to see higher prices in bread, corn, baking flours, honey, beverages in aluminium cans, cheese, cooking oils and many other products, Klein said.
Moreover, Namibia currently does not have any barley producing operations and therefore remains vulnerable to global barley prices, this could lead to an increase in beer production costs and ultimately higher consumer prices for different beer products, Klein added.
“With the above-mentioned risks to global food prices, it could be that local inflation in Namibia surprises to the upside and surpasses our forecast of 4.7% for 2022.”
Zones
With regard to the zones, Zone 2 (Windhoek) recorded the highest inflation rate of 5.3% and remained steady from the previous month.
In addition, Zone 3 (//Kharas, Erongo, Hardap and Omaheke) recorded the second highest inflation rate of 4.1%, while Zone 1(northern region) recorded an inflation rate of 3.9% in February 2022.
Inflation in Zone 1 mainly emanated from increases in the price levels of transport (from 1.6%to 12.5%), hotels, cafés and restaurants (from 2.7% to 6.4%), education (from -1.3% to 1.8%) and food and non-alcoholic beverages (from 5.0% to 5.4%), NSA said.
For Zone 2, the increase was mainly due to increases witnessed in the price levels of transport (from -0.4% to 13.8%), cafés, and restaurants (from -2.0% to 11.5%) and furnishing, household equipment and routine maintenance of the house (from 4.1% to 13.6%).
Lastly, the increase in the annual inflation rate for Zone 3 resulted mainly from increases in the price levels of transport (from -1.3% to 13.4%), furnishing, household equipment and routine maintenance of the house (from 1.5% to 5.0%), education (from 0.8% to 7.0%), hotels, cafes, and restaurants (from -1.2% to 3.6%) and clothing and footwear (from -3.8% to 0.4%), the agency said. [email protected]
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