Rent, transport drive inflation

The high cost of housing continues to drive inflation and local investment managers IJG Securities believe it will “underpin overall inflation”.In its latest consumer price index report for March, the firm says that housing and utilities are the largest contributors to annual inflation. Excessively high rent increases of up to 9.7% in January had a large effect on overall inflation. In March, it dropped a mere 0.1% to 9.6%.Good news for consumers is that there has been a slight decline in overall inflation, dropping to 7% in March from 7.8% in February.“The decrease in annual inflation was largely as a result of a drop in food prices and a slight decrease in rental payments for dwellings,” IJG says.However, the impact of the decline in food price inflation was neutralised by the increased cost of motor vehicles and general transport due to an increase in fuel prices.Overall, prices in three of the 12 categories increased at a faster annual rate than during February, eight at a slower rate and one grew at a steady pace. Prices for goods increased 6.3% year on year while the cost of services grew 8.1% year on year.Due to a stronger Namibian dollar, there was a slower growth in goods prices. Food and non-alcoholic beverages, the second largest category, was the second largest contributor to annual inflation despite a 0.6% decrease in prices on a monthly basis. Food and non-alcoholic beverage prices increased by 7.4% year on year, a large drop considering the 11.3% increase in February. “The slowdown in annual food and non-alcoholic beverage inflation was partly due to base effects of a large monthly increase in March 2016 as well as the decrease in prices on a monthly basis this March. The price cuts in maize meal and flour seen earlier this year mean that bread and cereal prices are now only 1.5% up from March last year,” the report says.The annual growth in coffee, tea, and cocoa prices has slowed slightly, but this group still sees prices increases of 22.7% on a year-on-year basis, the quickest in the entire food category. Fish prices are also still significantly higher than last year, with an increase of 16.7%.Transport was one of the few basket categories to see an increase in annual inflation in March, largely due to an increase in fuel prices during the month and supported by increases in vehicle prices. The cost of buying a car continued to decline to 6.9% in March compared to 9.4% in February, while the growth in the cost of operating personal transport equipment increased to 8.5% year on year compared to 4.5% in February.Alcohol and tobacco did not grow significantly, with liquor up by 0.4% month on month in March versus 0.3% in February and tobacco prices remaining flat.However, IJG is of the view that “the increases in sin taxes should put upwards pressure on alcohol and tobacco prices in April as the increased tariff is passed on to the consumer.”Overall it appears as though Namibia's inflation is declining at a faster rate than was anticipated at the beginning of the year. According to IJG, the strengthening rand drove a decrease in goods inflation and oil was stable at roughly US$55 a barrel. The end of the drought too brought some relief to consumers with some food prices actually declining. But it is not all good news“The recent downgrade of South Africa's credit rating, however, has seen the rand depreciate with further weakness a strong likelihood. This will flow through to inflation and could cause South African inflation to remain above the 3% to 6% target range for longer than expected. Due to currency effects we expect annual inflation to remain elevated over the short term although possibly dipping below 7% in April,” the investment firm concluded.STAFF REPORTER

Rent, transport drive inflation

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Namibian Sun 2025-07-01

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Rent, transport drive inflation

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Namibian Sun 2025-07-01

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