By Staff Reporter
WINDHOEK
The outlook for inflation remains extremely bleak, with upward pressure expected in both food and utility prices in the immediate future.
Director of Research at Investec Asset Management Namibia, Alfred Kamupingene, says month-on-month inflation in Namibia has decreased from 0.9% to 0.6% and the year-on -year numbers have come down from 7.2% to 6.8%.
He however warns that food inflation will continue to put upward pressure on the consumer price index (CPI).
“Due to the global food shortage, below average expected rainfall in some regions, rising global freight rates and maize usage for the production of ethanol, food price inflation is expected to remain high for a while.
“In the US, approximately 20% of the country’s corn supply is now taken up by the bio-fuel industry. The high maize prices also reflect in meat, milk and cheese prices because animals are fed with grain,” Kamupingene said.
In a statement issued by Investec, he indicated the future market has put the maize price at N$1 950 per tonne for December 07 and N$1 967 per tonne by March 2008.
Another dominant category in Namibia’s inflation basket is housing, water, electricity and other fuels.
According to Kamupingene, there will be further upward pressure on inflation, given that the entire Southern African region is experiencing peak time power shortages.
“Utility companies are now investing in additional capacity and will push up unit prices in order to cover the expenses incurred.”
Although the strong Namibian dollar has helped to minimise the impact of oil inflation, Kamupingene warns that insufficient refinery capacity, geopolitical risk and climatic catastrophes might upset the scales.
On the positive side, he pointed out that prices in the sub-categories furnishing and housing equipment, heating and cooking appliances and audio-visual, photographic and data processing equipment continue to decline.
“These prices have been fundamentally affected by cheap manufacturing in Asia.”