WINDHOEK – The annual inflation rate slowed to 3.3 percent in September 2019 from 4.8 percent recorded in September 2018, representing a slowdown of 1.5 percentage points. According to the latest Consumer Price Index (CPI) from the Namibia Statistics Agency (NSA) this latest inflation figure resulted from slowdowns recorded in Transport (from 12.9 percent to 2.5 percent), Alcoholic beverages and tobacco (from 5.6 percent to 3.3 percent), Health (from 5.0 percent to 3.2 percent), Housing, water, electricity, gas and other fuels (from 3.8 percent to 2.0 percent), Miscellaneous goods and services (from 3.9 percent to 2.7 percent), Recreation and culture (from 5.0 percent to 4.0 percent) and Hotels, cafes and restaurants (from 3.6 percent to 2.8 percent).
The latest CPI for September shows that the twelve months annual average and monthly average inflation rates from October 2018 to September 2019 stood at 4.4 percent and 0.3 percent. Corresponding rates recorded during the same period a year earlier stood at 4.3 percent and 0.4 percent respectively.
The average annual and average monthly inflation rates for the period January 2019 to September 2019 were estimated as 4.1 percent and 0.3 percent respectively.
During September 2019, the main drivers of inflation rates were: Education (12.0 percent), Food and non-alcoholic beverages (4.4 percent), Recreation and culture (4.0 percent), Alcoholic beverages and tobacco (3.3 percent) and Health (3. 2 percent).
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 with 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 reweighted 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. The basket now contains over 350 items, grouped into 12 categories and 55 subcategories, 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: (1) Housing, water, electricity, gas and other fuels, (2) Food and non-alcoholic beverages and (3) 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 the overall inflation than 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.