WINDHOEK – The annual inflation rate for December 2019 stood at 2.6 percent compared to 5.1 percent registered in December 2018, indicating an inflationary slowdown of 2.5 percentage points. On a monthly basis, inflation stood at -0.1 percent compared to 0.1 percent registered in the preceding month.
The latest figures from the Namibia Statistics Agency (NSA) indicate that the slowdown in the annual inflation rate resulted mainly from transport (from 10.9 percent to 2.0 percent), alcoholic beverages and tobacco (from 5.9 percent to 3.2 percent), food and non-alcoholic beverages (from 5.2 percent to 1.7 percent), health (from 4.8 percent to 3.2 percent), miscellaneous goods and services (from 4.0 percent to 1.3 percent) and housing, water, electricity, gas and other fuels (from 3.1 percent to 1.9 percent).
The main drivers of the annual inflation rate during the month of December 2019 were mainly education (12.0 percent), recreation and culture (5.2 percent), hotels, cafes and restaurants (4.1 percent), health (3.2 percent), alcoholic beverages and tobacco (3.2 percent) and furnishing, household equipment and routine maintenance of the house (3.0 percent).
The NSA also announced that the December 2019 All Items Index increased to 138.5, up from 135.0 in December 2018. The annual average and monthly average inflation rates for the year 2019 stood at 3.7 percent and 0.2 percent as compared to 4.3 percent and 0.4 percent registered a year earlier.
The NSA planned to rebase the Consumer Price Index (CPI) basket based on the 2015/16 Namibia Household Income and Expenditure Survey (NHIES) results. However, due to methodological changes in the NHIES 2015/16 undertaken, the rebasing process could not take place. The next NCPI rebasing is, therefore, expected to be done after the next NHIES.
Meanwhile, the NSA commenced with the publishing and disseminating the April 2019 Zonal CPIs edition in May 2019.
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 and 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: (i) housing, water, electricity, gas and other fuels, (ii) Food and non-alcoholic beverages and (iii) 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. 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.