Inflation rate declines to 3%

Namibia's annual inflation rate experienced a notable decline in October, dropping to 3% year-on-year (y/y) from 3.4% y/y in September, according to data released by IJG Securities. The consumer price index (CPI) reflected a month-on-month (m/m) increase of 0.4%, indicating a modest rise in overall prices across the nation.The latest figures reveal that five out of twelve categories within the national consumer price index recorded slower inflation rates in October compared to the previous month, while prices for recreation and education remained unchanged. Specifically, goods saw a price increase of 2.5% y/y, while services rose by 3.8% y/y.CategoriesAmong the various categories, housing and utilities emerged as the most significant contributor to the annual inflation rate, accounting for 1.08 percentage points of the total figure. Food and non-alcoholic beverages followed closely, contributing 1.01 percentage points, with alcohol and tobacco adding another 0.66 percentage points. Notably, fuel prices plummeted by an average of 13.2% y/y compared to October 2023, leading to a deflationary impact on the transport category, which contributed -0.47 percentage points to the overall inflation rate.IJG Securities noted that this trend is expected to continue into November, as fuel prices remain significantly lower than last year’s levels.In terms of specific contributions from different categories, recreation and furnishings added 0.17 and 0.14 percentage points, respectively, in October. The report highlighted that prices in these categories rose by 5.1% y/y, consistent with the previous month’s figures. Within the food and non-alcoholic beverages category, most sub-categories experienced monthly price increases; however, six sub-categories saw declines.The report also pointed out that fruit prices surged dramatically by 16.3% y/y, while coffee, tea, and cocoa prices increased by 9.6% y/y.HousingOn the housing front, inflation within the housing and utilities category recorded a monthly increase of 1.0% and an annual rise of 4.4%. Rental payments specifically saw an annual inflation rate of 4.2%, marking the fourth adjustment in rental figures this year despite typically being revised only once annually.Additionally, costs associated with regular maintenance and repair of dwellings rose by 2.7% y/y, up from a previous rate of 1.4% y/y in September. Water supply and sewage services also experienced significant annual price increases of 4.8% y/y—the highest rate since July 2022.OutlookDespite the easing inflation rate driven by slower price increases in several key categories and a deflationary impact from fuel prices, IJG Securities cautioned that persistent inflationary pressures remain prevalent in housing, utilities and food sectors. With fuel prices continuing to exert a disinflationary effect on overall CPI figures, analysts suggest that inflation is likely to remain subdued in the near term.Looking ahead, IJG highlighted potential risks associated with rising food and utility costs that could counteract any further benefits from declining transport prices.The firm’s inflation model forecasts that Namibia's annual inflation rate will average between 4.2% and 4.3% in 2024, with their base case prediction set at 4.2%.

Inflation rate declines to 3%

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Namibian Sun 2025-02-27

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Inflation rate declines to 3%

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Namibian Sun 2025-02-27

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