Consumers making peace with food prices
03 July 2021 | Economics
Overall inflation rose to 2.8% during the first quarter of 2021 from 2.3% during the corresponding quarter of 2020.
According to the Bank of Namibia (BoN) quarterly bulletin, the rise largely originated from inflation for the categories of food and housing.
Food prices increased on account of supply constraints particularly for meat, while rent deflation recorded in 2020 in the rental payment for dwelling subcategory made way for moderate rent increases in 2021, the central bank said.
According to the Namibia Statistics Agency (NSA), overall food inflation jumped from 4.8% in May last year to 7.1% in May this year, an increase 2.3%.
In addition, meat inflation spiked from 6.5% in May 2020 to 16.9% in May this year, an increase of 10.4%.
Furthermore, rent record a deflation of 2.3% in May last year compared to an inflation rate of 1.3% in May this year, an increase of 3.6%.
Meat is captured by the food and non-alcoholic beverages category which carries the second largest weight of 16.45 in Consumer Price Index (CPI) of the Namibia Statistics Agency.
Moreover, rent is captured by the housing, water, electricity, gas and other fuels category which carries the largest weight of 28.86 in the CPI. Therefore, on average, for every N$100 that consumers have in their wallets, N$16.45 and N$28.86 is likely to be spend on food and housing, respectively.
Overall, activity in the domestic economy slowed driven by weak performances in most key sectors of the economy.
Declines were observed in livestock marketing activity and in the mining, construction, manufacturing, wholesale and retail trade and tourism sectors which continued to endure the impact of the Covid-19 pandemic, BoN pointed out.
The mining sector decline was attributed to lower production of diamonds, zinc concentrate and gold. Livestock marketing activity in the agricultural sector declined due to restocking by farmers.
Activity in the construction sector declined, as both government and private construction works weakened and the tourism sector remained depressed, as reflected in lower numbers of tourist arrivals, BoN added.
Moreover, the manufacturing sector decline was driven mainly by lower output of refined zinc, blister copper and beer. Likewise, real turnover in the wholesale and retail trade sector decreased during the quarter under review, due to low demand, as the impact of the Covid-19 pandemic continued to persist, BoN said.