AS expected, the combined effect of higher fuel prices and fares for public transport services is exerting upward pressure on the inflation rate.
Inflation accelerated from 0.03% in August to 0.8% in September. This is the highest month-on-month inflation rate after a 1.6% rise in January 2018.
Transport inflation provided the main push for the higher inflation rate for the month September from 9.7% in August to 12.9% in September.
It is the highest inflation rate for this category since 2010. Since transport contributes 14.3% to the overall inflation rate, this increase by 3.2 percentage points translates into on overall increase of the inflation rate by 0.5 percentage points.
Research Associate at the Economic Association of Namibia, Klaus Schade stated that higher transportation costs will have an impact on the prices of other goods soon and so called second round effects.
He further stated that the weaker currency compared to a year ago, even though it has gained some ground again since the middle of September, will result in higher prices for goods imported from outside the rand area.
“Sourcing goods to the fullest extent possible locally will protect producers and consumers from increasing transportation costs and a weaker currency,” explained Schade.
According to the latest statistics from the Namibia Statistics Agency, the inflation rates for both goods and services increased in September 2018, but price rises for goods remained the key driver for the higher inflation rate. Prices for goods rose by 4.9% in September compared to 4.6% in August, while prices for services increased by 4.7% compared to 4.1% in August. Prices for both categories accelerated at the fastest pace this year. While the inflation rate for goods exceeded the inflation rate a year ago (3.6%), the inflation rate for services remained below last year’s inflation rate of 8.4%.
After a peak of 4.1% in June 2018, food price inflation continued to slow down to 2.6% in September from 2.7% in August. Bread and cereal prices, however, rose at the fastest pace in September (3.8%) after actual price reductions during the first four months this year. In contrast, meat prices increased by only 4.6%; the lowest increase not only for this year, but since November 2016, when prices rose by 4.4%. Bread, cereals and meat account for 51% of the food price inflation and therefore have a strong influence on the overall inflation rate for this category.