High rent drives inflation
STAFF REPORTER
There appears to be no relief on the horizon for consumers based on the latest inflation figures released by the Namibia Statistics Agency (NSA).
The inflation rate for February stood at 7.8%.
Some analysts believe that an almost 10% month-on-month increase in property rent is driving inflation, which is now higher than in South Africa.
And the pressure will continue. According to economists, the inflation rate is not expected to drop much and should hover above 7% for the rest of the year.
In its assessment IJG Securities wrote: “Namibian inflation is now much higher than that of South Africa, and expectations are for high inflation rates to continue in both countries.
“South African inflation is expected to average 6.2% in 2017, according to their reserve bank’s monetary policy committee’s January forecast.
“These expectations are largely driven by a weaker, real effective exchange rate and the pass-through effect of higher import prices. The effect of higher food inflation due to the drought, and the pass-through effect of South African food prices on Namibia, will likely cause the double-digit increases in food prices to continue in the short term, although we are starting to see some of this pressure ease.”
The company added that annual inflation in Namibia averaged 6.7% in 2016, but given the surprisingly high monthly increases witnessed in January, “inflation can be expected to remain quite high in 2017”. The main driver of this, according to IJG Securities, is a rent increase of 9.7% month-on-month, the largest increase in the last 14 years.
“Thus, our expectation is for 2017 inflation to average 7.9%,” IJG concluded.
Some of the price inflation in the ‘basket’ which makes up the Consumer Price Index has slowed down, though. Comparing February 2017 to February 2016, inflation on alcohol and tobacco dropped slightly from 7.9% to 5.4% and healthcare came down to 5.6% from 7%. Clothing and footwear inflation slowed by one basis point to 0.8%.
Five critical groups in the basket continued to increase, contributing to the higher inflation rate. They were: food and non-alcoholic beverages (11.3%), housing, water, electricity, gas and other fuels (9.6%), furnishings, household equipment and routine maintenance (8.5%), education (7.8%), and hotels, restaurants and cafés (7.6%).
There appears to be no relief on the horizon for consumers based on the latest inflation figures released by the Namibia Statistics Agency (NSA).
The inflation rate for February stood at 7.8%.
Some analysts believe that an almost 10% month-on-month increase in property rent is driving inflation, which is now higher than in South Africa.
And the pressure will continue. According to economists, the inflation rate is not expected to drop much and should hover above 7% for the rest of the year.
In its assessment IJG Securities wrote: “Namibian inflation is now much higher than that of South Africa, and expectations are for high inflation rates to continue in both countries.
“South African inflation is expected to average 6.2% in 2017, according to their reserve bank’s monetary policy committee’s January forecast.
“These expectations are largely driven by a weaker, real effective exchange rate and the pass-through effect of higher import prices. The effect of higher food inflation due to the drought, and the pass-through effect of South African food prices on Namibia, will likely cause the double-digit increases in food prices to continue in the short term, although we are starting to see some of this pressure ease.”
The company added that annual inflation in Namibia averaged 6.7% in 2016, but given the surprisingly high monthly increases witnessed in January, “inflation can be expected to remain quite high in 2017”. The main driver of this, according to IJG Securities, is a rent increase of 9.7% month-on-month, the largest increase in the last 14 years.
“Thus, our expectation is for 2017 inflation to average 7.9%,” IJG concluded.
Some of the price inflation in the ‘basket’ which makes up the Consumer Price Index has slowed down, though. Comparing February 2017 to February 2016, inflation on alcohol and tobacco dropped slightly from 7.9% to 5.4% and healthcare came down to 5.6% from 7%. Clothing and footwear inflation slowed by one basis point to 0.8%.
Five critical groups in the basket continued to increase, contributing to the higher inflation rate. They were: food and non-alcoholic beverages (11.3%), housing, water, electricity, gas and other fuels (9.6%), furnishings, household equipment and routine maintenance (8.5%), education (7.8%), and hotels, restaurants and cafés (7.6%).
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