The cost of living slightly under control

13 November 2021 | Economics

Theo Klein; Economist; "Simonis StormInflation remains below its long run average of 5.4% since 2003."

Windhoek ∙ [email protected]

Despite there being global supply constraints of goods, which is likely to fuel inflation, demand-pull inflationary pressures remain weak in Namibia due to consumers remaining cautious in their spending decisions.

Statistics released by the Namibia Statistics Agency (NSA), indicated that annual inflation marginally lifted to 3.5% year-on-year in September 2021 compared to 3.4% year-on-year in August 2021.

When compared to September 2020, annual inflation stood at 2.4%, an increase of 1.1 percentage points. The biggest drivers of local inflation were transport, food and non-alcoholic beverages, and alcoholic beverages and tobacco.

This month, fuel prices increased 30 cents per litre, which is the fifth fuel price increase for 2021. The transport category, which captures fuel, carries the third largest weight in the NSA consumer price index of 14.28. This implies that on average, for every N$100 that consumers have in their pockets, N$14.28 is likely to be spend on transport. The food and non-alcoholic beverages have the second largest weight of 16.45 in NSA consumer basket.

According to Theo Klein, economist at Simonis Storm, meat prices are the biggest contributor to higher local food prices. During September 2021, chicken prices saw the largest annual increase, up by 15.9%, with beef (up 13.0%), sausages (up 10.1%), lamb (up 9.2%) and pork (up 9.0%). Fish continues to see the slowest pace in rising prices, recording annual inflation of 1.6%. Cooking oil prices are 26.7% more expensive on an annual basis. Wild fires impacting cooking oil production in Canada, one of the biggest producers globally, led to higher cooking oil prices worldwide. “Looking at the typical food items a family would buy for a braai such as lamb, sausage, potatoes and beer, we estimate that the average braai is 7.3% more expensive compared to a year ago,” he said.

Inflation remains below its long run average of 5.4% since 2003. Moderating inflation since last year is reflective of subdued consumer spending, coupled with lower government spending in certain industries. "While phenomena such as global supply chain bottlenecks and climate change effects provide support for cost-push inflationary pressures, we do believe demand-pull inflationary pressures remain weak due to consumers remaining cautious in their spending decisions," Klein pointed out.


With regard to the zones, Zone 3 (//Kharas, Erongo, Hardap and Omaheke) recorded the highest inflation rate, followed by Zone 1 (northern regions) and Zone 2 (Windhoek).

The annual inflation rate in Zone 1 increased by 3.1% in September 2021 compared to 2.5% registered in September 2020. The increase in the annual inflation rate resulted mainly from increases in the price levels of transport from 1.2% to 9.5%, housing, water, electricity, gas and other fuels from -2.7 percent to 1.0%, and clothing and footwear from -9.0% to -3.6%, NSA pointed out.

As for Zone 2, the annual inflation rate stood at 3.1% compared to 2.6% recorded in September 2020. The increase was mainly due to increases in the price levels of transport from 2.2% to 6.3%, furnishing, household equipment and routine maintenance of the house from 1.7% to 4.5 %, miscellaneous goods and services from 5.2% to 7.1%, housing, water, electricity, gas and other fuels from -1.1% to 0.4% and health from 3.4% to 4.9%.

Lastly, the annual inflation rate for Zone 3 increased by 4.6% in September 2021 from 1.9% recorded in September 2020. The increase resulted from increases in price levels of all groups with the exception of Recreation and culture from 3.3% to 2.4% and health from 1.4% to 1.1%, NSA said.

The housing, water, electricity, gas and other fuels component accounts for 28.4% of the consumer basket. Photo Phillepus Uusiku

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