Fuel, inflation increases coming
The potential of a trade war between the United States and China, an interest rate hike in the US and a cut in oil production by Venezuela, could be enough to influence oil prices adversely, said independent economist Klaus Schade.
This could also further have the effect of driving an increase in fuel prices he said, when commenting on ongoing developments currently unfolding globally.
Schade's comments are evident in a recent decision by the ministry of energy to increase fuel prices by 60 cents per litre.
“The current interest hike in the United States and anticipated further hikes, could weaken the South African rand and other emerging market currencies, while the withdrawal of the USA from the Iran deal, and the worsening situation in Venezuela, could cut oil supply unless the Organisation of Petroleum Exporting Countries (OPEC) decides at its next meeting to increase output,” said Schade.
“These two factors could result in increased oil prices in Namibian dollar terms, and hence could translate into increased fuel prices,” Schade added.
His comments were echoed by Simonis Storm analyst Indileni Nanghonga who said increases in the fuel price would filter through to the supply chains, driving up the price of goods and services.
“Inflation is a real confidence killer in the already depressed Namibian economic environment, and will start to drift upwards in the coming months as the recent spike in oil prices filters through the supply chains, especially in the transport category, and as the rand continues to weaken. This will simultaneously feed through to other inflation categories such as food and beverages,” she said.
PSG Konsult, in a report, said inflation was now expected to trend upwards, having reached its lowest levels in April. PSG Konsult said a weakening of the Namibian dollar would also result in higher fuel costs.
“We believe that inflation reached the bottom of the cycle in April and will increase steadily during the remainder of 2018. The weakening of the Namibian dollar and higher international oil prices will put pressure on fuel prices and import costs in coming months,” said PSG Konsult in a report following the release of the Consumer Price Index (CPI) [OT1] report by the Namibia Statistics Agency (NSA).
The annual inflation rate increased 3.8 % in May 2018 from 3.6 % in the previous month, following the release of the CPI report by the NSA. “Inflation was mainly driven by education, health, transport and alcoholic beverages and tobacco, which increased by 9.9%, 5.7%, 5.6% and 5.4% respectively,” the NSA said.
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This could also further have the effect of driving an increase in fuel prices he said, when commenting on ongoing developments currently unfolding globally.
Schade's comments are evident in a recent decision by the ministry of energy to increase fuel prices by 60 cents per litre.
“The current interest hike in the United States and anticipated further hikes, could weaken the South African rand and other emerging market currencies, while the withdrawal of the USA from the Iran deal, and the worsening situation in Venezuela, could cut oil supply unless the Organisation of Petroleum Exporting Countries (OPEC) decides at its next meeting to increase output,” said Schade.
“These two factors could result in increased oil prices in Namibian dollar terms, and hence could translate into increased fuel prices,” Schade added.
His comments were echoed by Simonis Storm analyst Indileni Nanghonga who said increases in the fuel price would filter through to the supply chains, driving up the price of goods and services.
“Inflation is a real confidence killer in the already depressed Namibian economic environment, and will start to drift upwards in the coming months as the recent spike in oil prices filters through the supply chains, especially in the transport category, and as the rand continues to weaken. This will simultaneously feed through to other inflation categories such as food and beverages,” she said.
PSG Konsult, in a report, said inflation was now expected to trend upwards, having reached its lowest levels in April. PSG Konsult said a weakening of the Namibian dollar would also result in higher fuel costs.
“We believe that inflation reached the bottom of the cycle in April and will increase steadily during the remainder of 2018. The weakening of the Namibian dollar and higher international oil prices will put pressure on fuel prices and import costs in coming months,” said PSG Konsult in a report following the release of the Consumer Price Index (CPI) [OT1] report by the Namibia Statistics Agency (NSA).
The annual inflation rate increased 3.8 % in May 2018 from 3.6 % in the previous month, following the release of the CPI report by the NSA. “Inflation was mainly driven by education, health, transport and alcoholic beverages and tobacco, which increased by 9.9%, 5.7%, 5.6% and 5.4% respectively,” the NSA said.
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