By Hilary Mare
THE Namibia Statistics Agency’s (NSA) Consumer Price Index (CPI) for August 2018 shows that transport inflation has continued its upward trajectory accelerating to 9.7 percent in August from 8.9 percent in July. This is the fastest increase since more than four years ago.
Subsequently, prices for transport increased by 12.6 percent in August after an increase by 11.8 percent in July which is the strongest increase in six years (September 2013: 13.0 percent).
The index also showed that the annual inflation rate eased slightly from 4.5 percent in July to 4.4 percent in August 2018, but dropped by one percentage from 5.4 percent in August 2017.
However, it is the second highest inflation rate so far this year only exceeded by price increases in July. On a month-to-month basis, inflation slowed down from 0.5 percent in July to 0.03 percent in August.
Klaus Schade, Research Associate at the Economic Association of Namibia noted that despite taxi fare increases for Windhoek, the inflation rate for public transport services (1.7 percent) was lower than over the preceding six months.
In contrast, vehicle prices accelerated at the fastest rate at 7.9 percent since April 2017 (8.2 percent).
“We expect inflation to pick up again owing to fuel price increases by NAD0.40 per litre in September, which translates into a price increase of 23.4 percent compared to September 2017.
Fuel price increases contribute almost 9 percent to the overall inflation rate. Fuel price increases have a direct impact on transportation costs and over time on the costs of other products that have to be transported.
The depreciation of the Namibia Dollar against other currencies such as the US Dollar and Chinese Yuan will push up prices for other imported products in the coming months,” Schade said.
After accelerating every month this year with the exception of March, the inflation rate for goods remained unchanged at 4.6 percent in August 2018.
Contrary to the overall inflation rate, the inflation rate for goods was 1.2 percentage points higher than in August 2017 (3.4percent).
Prices for services increased at the slowest pace not only for this year, but since December 2015.
The inflation rate for services stood at 4.1percent in August 2018, almost half of the inflation rate in August 2017 (8.1percent).
Services account for 42.3 percent of the consumption basket and goods for 57.7percent.
Food price inflation slowed down from 3.2 percent in July to 2.7 percent in August 2018 and remained below food price inflation in August 2017 of 4.6 percent. Price increases for bread and cereals accelerated in August compared to July to 2.6 percent from 1.5percent resulting in the second strongest price increase this year.
“It is in part caused by the base effect, since prices dropped by 0.5 percent in August 2017 and hence prices have increased from a low level. Although meat prices rose faster (6.0percent) in August than in July 2018 (5.1percent), prices increased at a slower pace than during the first half of this year. These two categories account for almost 51 percent of the whole food basket and therefore strongly influence the overall food inflation.
Schade however said the price increases in these two categories were levelled out by lower prices for milk and dairy products as well as for sugar and jam.
Prices for milk dropped by 2.7 percent compared to August 2017, which is the strongest price decline since April 2011. Prices for sugar etc. declined by 1.9percent in August compared to a decline by 0.6percent in July. Fruit prices increased (7.9percent), but at a slower pace than in July (12.7percent), like prices for vegetables that rose by 6.0percent, which was below the inflation rate for vegetables in July (8.0percent) and June (6.1percent). These four categories account for some 26percent of the food consumption basket, further explained Schade.
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