TO maintain the same level of standard of living since last month and in the future, it would be necessary to have an income which increases by 4.4% each month.
Indeed, this is the rate at which the prices of goods and services have increased over the past 12 months, ending in June 2022.
Data from the Namibian Statistics Agency (NSA) shows that the average price increase is sometimes higher than the monthly rate, which was the case in June when inflation was recorded at 6%.
Prices are rising at a much faster pace for goods, which stood at 8.2% in June, and 2.2% for services, according to the NSA.
The prices are also not the same in the regions.
Although the central region of the country is the heart of economic productivity, the prices of goods and services are higher there at 6.2%, more than the country’s overall inflation rate.
The northern regions remain the most affordable to live in, with inflation recorded at 5.6%.
Coincidentally, the southern regions also recorded an inflation rate of 5.6%.
Announcing the figures yesterday, NSA Statistician General Alex Shimuafeni said that for June 2022 the annual inflation rate was 6%, down from 4.1% recorded in June 2021.
He said it was the highest rate since July 2017.
The main contributors to the June 2022 annual inflation rate were transportation (2.7 percentage points), food and non-alcoholic beverages (1.3 percentage points), alcoholic beverages and tobacco (0. 8 percentage points), housing, water, electricity, gas and other fuels, as well as furniture, household equipment and routine home maintenance each contributed 0.4 points percentage.
The largest variations in the annual inflation rate were observed mainly in the categories transport (18.6%), hotels, cafes and restaurants (8.6%), furniture, household equipment and routine household maintenance (7. 1%), food and non-alcoholic beverages (7%) and alcoholic beverages and tobacco (5.8%).
Simonis Storm Securities analyst Theo Klein says Namibia has consistently recorded lower annual inflation rates in recent months, compared to other African countries, emerging markets and advanced economies.
He says June’s high inflation rate is starting to make it clear that rising input costs are feeding through into rising consumer prices.
Klein is skeptical of the 6% rate, however, saying average price increases could be higher.
“As goods are more mandatory budget expenditures (e.g. food, fuel, etc.) compared to services, which are more discretionary budget expenditures (e.g. travel, tourism, entertainment, etc.), average inflation property of 6.7% is likely closer to the reality on the ground for what the average Namibian experiences,” he says.
The future also looks bleak, especially with the appreciation of the US dollar.
“The US dollar is at its highest level in 20 years, which will make it more expensive to buy commodities and raw materials whose world price is in US dollars. Although commodity prices are expected to moderate for the remainder of 2022, the strengthening of the US dollar – and the weakness of the rand as a result – will likely keep commodity inflation high going forward.
“We therefore expect goods inflation to persist above 7% in the coming months, raising headline inflation rates likely above 6% in the meantime,” Klein said.
War in Ukraine also remains a lingering risk, he said, adding that there is a risk that developments there could spill over into Namibia’s cost of living crisis.
Supply chains are expected to remain expensive in 2023 even if the war in Ukraine ends in 2022, as it would take time to repair damaged or destroyed transport infrastructure.
“This will be one of many factors that will keep inflation high in advanced economies and in Namibia in 2023. We do not expect inflation in advanced economies to return to central bank targets (mainly 2%) l next year, for other reasons as well. ,” he says.
The effect of these increasing inflation rates used to have negative social impacts in some countries.
“Without pro-poor economic growth and a significant increase in job creation in the very near term, we expect crime and frustration among the most vulnerable to be on the slope,” Klein said.
Monthly data is available from the NSA.
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