By Hilary Mare
RETAILERS will remain under pressure over time as deflation persists in the clothing and furnishing categories of the economy, Simonis Storm Securities (SSS) has said.
According to the Namibian Statistics Agency (NSA), which released the inflation numbers for July 2018 last week, clothing inflation increased only by 0.7percent over the last five years.
July 2018 marked the 11th month of deflation within the clothing category mainly seen in girls’ clothing (-16.9percent), children’s clothing (-9.5percent), adult footwear (-8.0percent) and women’s clothing (-7.0percent)
On an annual basis, overall inflation increased at a slower pace of 4.5percent in July 2018 compared to 5.4percent recorded in the prior year. The annual increase can be ascribed to the rising inflation in transport, alcoholic beverages, education and the hotel, café and restaurant categories.
“Year to date (Jan- Jul), inflation averaged 3.7percent and we expect it to average 4.1percent at the end of the year,” SSS said.
Transport, which weighs 14.3percent in the inflation basket, increased drastically by 8.9percent in July 2018 compared to a 2.4percent growth rate in the prior year.
“We believe that the effect of the fuel levy coupled with the increase in the fuel price during the month under review is feeding through the numbers,”SSS indicated.
August has also seen an increase in fuel prices with the 95 Octane unleaded petrol increasing by 25c/l to N$12.55/l. Diesel also increased by 25c/l to N$12.88/l for the 500ppm and to N$12.93/l for the 50ppm.
“This will subsequently increase transport inflation in the coming month. Operations of personal transport equipment have increased by 11.8percent in July 2018 compared to a 1.6percent growth rate registered in the prior year. Further increases in transport inflation will stem from a depreciating currency coupled with already elevated global oil prices,” SSS explained.
Food and non-alcoholic beverages weighing 16.5percent in the basket, increased at a slower pace of 2.9 percent in July compared to a 4.3percent growth rate in the prior year.
All sub-categories continued to slow down with the exception of the fruit and vegetables sub-categories which increased by 12.7percent and 8.0percent in July compared to 2.6percent and -1.8percent, respectively, in the prior year.
Last week, the Economic Association of Namibia also said that they were expecting continuous upward pressure on inflation owing to rising fuel prices that were increased by N$0.25 per litre because of the adjustment of the fuel tax in August.
“Although international oil prices have eased slightly, the depreciation of the Namibia dollar will increase the cost of oil in domestic currency. This could result in further under-recoveries (meaning the actual costs of fuel are higher than the pump price). If not fully or partly absorbed by the National Energy Fund as in the previous months, under recoveries will lead to fuel price increases. In addition, the municipality has increased bus fares, which will add further pressure on transportation costs.
“Future maize prices have eased slightly in July compared to June on a monthly average, but are on the increase again, while wheat prices continue to increase. However, monthly average wheat prices are below prices a year ago. Maize prices, on the other hand, exceed price levels last year. Hence, food price inflation is expected to remain at the current level,” the association said.
Confidente. Lifting the Lid. Copyright © 2015