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Rising prices push consumers to the brink

2023-01-17  Maihapa Ndjavera

Rising prices push consumers to the brink

Comparative consumer prices for the festive season, December 2022, increased to 6.9% when matched to 4.5%, recorded in December 2021. This is an increase of 2.4 percentage points on the pocket, with the main contributors being transport and food and non-alcoholic beverages, which both recorded 2.2 percentage point increases. The monthly inflation rate increased by 0.3%, compared to 0.5% registered a month earlier.

The inflation rate is vital for economic policy-making, particularly the conduct of monetary policy and consumers in general.

These figures were released by the Namibia Statistics Agency (NSA) last week in the Namibia Consumer Price Index (NCPI) for December 2022. 

The highest changes in the annual inflation rate were mainly witnessed in the categories of transport (14.8%); food and non-alcoholic beverages (11.8%); hotels, cafes and restaurants (11.7%); furnishings, household equipment and routine maintenance of the house (10.6%); recreation and culture (5.6%), and miscellaneous goods and services (4.5%).

Looking at the food and non-alcoholic beverage section, which accounts for 16.5% of the NCPI basket, annual inflation increased to 11.8% during the month under review, compared to 5.1% registered during the corresponding period of 2021. 

On a monthly basis, price levels for this category increased by 2.2% during the period under review, compared to 0.6% recorded in the preceding month.

“Oils and fats price increase augmented by 20.8% during December 2022, compared to 11.9% recorded during the same period a year earlier. The increase was reflected mainly in the price levels of butter, which escalated from -0.6% to 8.4%; peanut butter from -0.2% to 2.7%, and cooking oil from 16.9% to 28.1%,” the NSA stated.

The astronomical increase in prices for household oils and fats takes a toll on informal traders, especially those in the vetkoek business, who derive the majority from informal trading.

This month, New Era visited Soweto Market in Katutura, where Almencia Kahengava, who has been in business for 23 years, said the situation is becoming extremely difficult to feed her customers, who are comprised mainly of low-income workers and students, as profits in the vetkoek business have all but dried up. 

“Since we have been in business, this is the toughest time of all. Oil and maize meal prices are not justified. At times, one just wants to sleep at home and rest, but the hunger pushes us to come try,” said Kahengava. 

She added customers complain when prices increase, so they have no choice: “There’s no profit!,” Kahengava lamented. 

Furthermore, the transport sector, which is one of the main inflation drivers of overall inflation and accounts for 14.3% of the consumer basket, increased by 14.8% in December 2022, compared to 14.3% recorded in December 2021.

“The increase in the transport component was mainly reflected in the price levels of the operation of personal transport equipment, which increased by 22.6%, compared to an increase of 19.7% recorded in December of 2021. On a monthly basis, the transport group recorded a deflation rate of 1% in December 2022, compared to an increase of 2% recorded during the previous month,” NSA stated.


Global inflation

Meanwhile, inflation rose throughout 2022 in almost all economies. The World Bank (WB), in its ‘January 2023, Global Economic Prospects’ report, stated median global headline inflation exceeded 9% in the second half of the year, its highest level since 1995. 

Inflation reached almost 10% in emerging markets and developing economies (EMDEs), its highest level since 2008 – and in advanced economies, just over 9%, the highest since 1982.

It is also assumed that global inflation will remain higher for longer. After peaking at 7.6% in 2022, global headline CPI inflation is expected to remain elevated at 5.2% in 2023 before easing to 3.2% in 2024, above its 2015-19 average of 2.3%, WB figures revealed.

“Global inflation has been pushed higher by demand pressures, including those from the lagged effects of earlier policy support, and supply shocks, including disruptions to both global supply chains and the availability of key commodities,” the bank noted.

It added that in some countries, inflation has also been spurred by large currency depreciations, relative to the US dollar, as well as tight labour market conditions.

 Inflation remains high worldwide and well above central bank targets in almost all inflation-targeting economies. 

Although inflation is likely to gradually moderate over the year, there are signs that underlying inflation pressures could be becoming more persistent.

2023-01-17  Maihapa Ndjavera

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