THE annual inflation rate dropped to 5.1% in December 2018 from 5.6% in November.
This is according to the Consumer Price Index (CPI) December 2018 statistics that were released by the Namibia Statistics Agency.
The CPI is used to calculate month-on-month (compared to the previous month) and year-on-year (compared to the same month in the previous year) inflation rates.
The slowdown in transport inflation was the main reason behind the lower overall inflation rate in December.
Transport inflation stood at 10.9% in December 2018 and was therefore lower than between September and November. However, it remains the fourth highest inflation rate for more than a decade. The reduction in fuel prices resulted in the drop of the inflation rate for the operation of transport equipment, which has the highest weight within the transport category and contributes 8.96% to the overall inflation rate. Prices for the operation of transport equipment rose by 10.5% in December compared to 15.4% in November. It was the slowest pace since June 2018. Transport contributed 14.3% to total consumption.
After continuous increases during 2018, inflation ended the year on a more positive note for consumers and producers, although it remains the second highest inflation rate for 2018 and on par with October. Month-on-month, the inflation rate decreased by 0.2%.
The inflation rate for both goods and services declined. After continuous increases in the inflation rate for goods since March 2018 from 2.8% to 6.1% in November, prices rose at a slower pace in December (4.2%).
The inflation rate for services started to rise in May 2018 from 4.2% to 4.8% in October and November 2018, before it decreased slightly to 4.5% in December. The inflation rate for services exceeded the inflation rate for goods for the first since June 2018.
Food price inflation continued its upward trend that started in October 2018 and increased to 5.4% in December from 4.9% in November. The main driver has been bread and cereal prices that rose by 7.9% in December compared to 6.0% in November.
This category contributes 32.8% to the overall food inflation rate and has therefore a strong impact on food price inflation. In contrast, meat prices increased at a slower pace of 3.5% compared to 4.7% in November. Meat accounts for 23.9% of the food basket. After price declines between May and September 2018, prices for sugar, jam, honey, etc. are on the rise again and increased by 4.7% in December. November was 4.3%.
Prices for housing, water, electricity, etc. increased at the slowest pace since October 2014 (3.1%), while they rose by 3.7% in November 2018. Both prices for the maintenance of houses as well as for water supply increased at a slower pace in December than in November. Prices for water supply rose by 4.7% as compared to 8.7%, while prices for repair and maintenance increased by 2.5% compared to 3.5%. The category ‘housing, water, etc.’ carries the highest weight in the consumption basket of 28.4%, meaning the average Namibian consumer spends 28.4% of total expenditure on these goods and services.