Windhoek
The annual inflation rate for July 2015 increased to 3.3 percent from 3 percent compared to the previous month.
According to the Namibia Statistics Agency (NSA) the increases in the annual inflation rate resulted mainly from increases in the price levels of the categories of “hotels, cafés and restaurants” and “food and non-alcoholic”, which increased to 7.5 percent and 5.3 percent, respectively, from 6 percent and 4.1 percent recorded in June 2015.
The monthly inflation rate for July 2015 also increased to 0.4 percent from 0.3 percent recorded in June 2015. The main drivers of inflation during the month of July 2015 also included health costs, which increased from 5.3 percent to 5.7 percent, as well as furnishing household equipment and routine maintenance of houses that increased from 4.2 percent to 4.5 percent.
In the Namibia Consumer Price Index (NCPI) for July, 2015, the NSA said the annual inflation for food and non-alcoholic beverages category stood at 5.3 percent in July 2015, a 1.2 percentage point increase from 4.1 percent recorded the previous month.
The monthly inflation rate for food and non-alcoholic beverages inflation rate was recorded at 0.2 percent as compared to 0.1 percent the previous month. The NSA explained that price increases in this category were mainly observed in the sub components of fish from 0.7 percent to 3.3 percent, milk, cheese and eggs from 0.5 percent to 1.5 percent and bread and cereals from 0.0 percent to 1.3 percent. The group contributed 0.9 percent to the overall annual inflation rate of 3.3 percent.
Meanwhile, the annual inflation rate for the group of hotels, café and restaurants stood at 7.5 percent in July 2015, a 1.5 percentage point increase from 6.0 percent recorded in the previous month. Corresponding rates recorded during the same period a year earlier stood at 5.9 percent. The NSA said the upward movement of inflation in this category was due to price increases in two sub groups of this group, which are catering and accommodation services.
For the period between July 2014 and July 2015, annual inflation rate fluctuated between 5.6 and 2.9 percent. The highest annual inflation rate recorded during the period was 5.6 recorded in July 2014 and the lowest of 2.9 percent was registered in April 2015.
The July 2015 monthly and annual inflation rates for goods were 0.6 and 3.7 percent while those for services stood at 0.2 and 2.7 percent. Corresponding rates recorded during the same period in the previous year stood at 0.0 and 6.8 percent and 0.4 and 4.0 percent respectively.
Inflation is calculated based on a basket of goods and services, containing a representative sample of the goods and or services commonly consumed in a country, and weighted in accordance to the relative percentage of expenditure allotted to each of the said goods at household level.
The price of these goods and services are then tracked over time, to illustrate the change in the cost of living over time. As spending patterns change, new products and services are added to the basket, and the basket is reweighed so as to better capture the current spending patterns of the consumer at the current point in time. As such, the inflation basket is generally reconstituted every five years.
In Namibia, the basket was last rebased in 2013, using household expenditure data collected in the 2009/10 Household Income and Expenditure Survey. As such, the basket now contains over 350 items, grouped into 12 categories and 55 sub-categories, for which prices are collected on a monthly basis from more than 900 retail outlets.
Namibian inflation, however, is largely determined by three categories of the overall NCPI basket, namely housing, water, electricity, gas and other fuels, food and non-alcoholic beverages and transport, which cumulatively make up just under 60 percent of the total inflation basket.
Additionally, following the rebasing of the NCPI basket in 2013, alcoholic beverages and tobacco make up an additional 12.6 percent of the basket, meaning that the four largest categories represent well over 70 percent of the total basket.
As such, a large increase in inflation in these categories has a greater impact on overall inflation than do increases in the lower weighted categories. Thus, it is rare to see major increases in overall inflation attributed to the lower weighted categories, despite the fact that these categories may have seen relatively high inflation in their own right.