By Catherine Sasman
WINDHOEK
Inflation has gone down from 7.2 percent in July to 6.7 percent in September mainly due to a decrease in transport inflation, although food price inflation continues to put upward pressure on the overall price level.
Governor of the Bank of Namibia (BoN), Tom Alweendo, made the announcement on Thursday after the bank’s monetary policy meeting on Wednesday.
The bank said it is reassuring that when transport inflation is omitted from the consumer price index, the remaining inflation components started to depict a downward trend, which suggests a moderation in overall demand conditions.
It nevertheless remains concerned over the upside risks of inflation due to the volatility in the international fuel prices and uncertainties about the food price outlook.
“It is not clear yet if the slow decrease is a trend or if it is something that will only continue for a short while,” cautioned Alweendo.
The bank said the Namibian economy is performing satisfactorily, with a noticeable slowdown in domestic demand indicators like vehicle sales, building plans passed and completed, and bank credit extensions to the private sector.
Sectoral indicators point to a mixed performance, however, with construction, transport and communication and financial sectors performing
“exceptionally well”. Agriculture, hunting and fo-restry, electricity and water, while showing signs of robust growth, did so at lower rates.
Moreover, growth in mining and quarrying output slowed down more significantly, and so have the hotels and restaurants sector and wholesale and retail trading sectors.
Credit extension to the non-governmental sector further displayed a downward trend from 13.4 percent at the end of June to 12.4 percent at the end of August.
The growth in mortgage credit also slowed down to a rate of 21.9 percent during August from 26.5 percent in June.
This, said Alweendo, could be attributed to the increase in interest rates.
Developments in the global economy indicated the bank remains relatively satisfactory with strong growth in the first half of the year, due to robust performance in particularly emerging market economies such as Brazil, Russia, India, China, and South Africa (or BRICS).
Emerging market economies are responsible for more than half of the global output in 2007.
The South African economy has shown a real GDP [Gross Domestic Product] growth of 4.5 percent during the second quarter of 2007, slightly lower than the 4.7 percent recorded in the first quarter of this year.