Windhoek
Consumers have to dig much deeper into their pockets this month to put bread on the table, as the monthly inflation for the food and non-alcoholic beverages category increased by a staggering 12.2 percent in July, compared to 5.3 percent recorded in July 2015.
According to the latest inflation figures by the Namibia Statistics Agency, the major drivers of the annual inflation rate for July were in the groups of food and non-alcoholic beverages (12.2 percent), housing, water electricity, gas and other fuels (8.2 percent), education (7.6 percent) and alcoholic beverages and tobacco (6.6 percent).
The All Items Index for July 2016 was estimated at 120.6, compared to 112.7 registered in July 2015.
The annual inflation rate for July 2016 increased by 3.7 percentage points to 7.0 percent from 3.3 percent recorded in July 2015.
For alcoholic beverages and tobacco the monthly increase was 6.6 percent, while the cost of health services went up by 6.4 percent.
On a monthly basis the price level increase in Namibia stood at 0.6 percent, compared to 0.3 percent recorded a month earlier – an increase of 0.3 percentage points.
During the period July 2015 to July 2016 annual inflation fluctuated between 3.3 percent and 7.0 percent. The highest annual inflation rate (7 percent) for this period was recorded in July 2016 and the lowest (3.3 percent) was registered in the months of July 2015, September 2015 and November 2015, 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, weighted in accordance with the relative percentage of expenditure allowed 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 re-weighted, so as to better capture the spending patterns of consumers at a specific point in time.
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 Namibia Consumer Price Index (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 the four largest categories represent well over 70 percent of the total basket.
The annual inflation rate for the group of alcoholic beverages and tobacco during the month of July 2016 stood at 6.6 percent, compared to 6.9 percent registered in July 2015, resulting in a decline of 0.3 percentage points. This trend emanated from a drop in the prices of the tobacco sub-component of the group.
As such, a large increase in inflation in these categories has a greater impact on the 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.
The annual inflation rate for the transport group increased to 3.3 percent in July 2016 from -1.8 percent registered in July 2015, resulting in a significant increase of 5.1 percentage points. This huge increase resulted from increases re-ordered in the price levels of vehicles purchased and the operation of transport equipment sub-components, which increased from 7.0 and -5.2 percent in July 2015 to 8.6 and 2.3 percent recorded in July 2016.
The annual inflation rate for housing, water, electricity, gas and other fuels group stood at 8.2 percent for July 2016, compared to 2.1 percent recorded during the same period a year earlier. The movement of the index for this category between July 2015 and July 2016 resulted from annual price increases in all sub-components of the group.