Martin Endjala
According to a Simonis Storms Securities economic report, Namibia’s annual inflation rate for January 2024 stood at 5.4 percent, down from 7.0 percent recorded in January 2023 but slightly up from 5.3 percent recorded in December 2023.
This is the second-highest inflation rate recorded at the beginning of the year since January 2017.
The report states that furthermore, the monthly inflation for January 2024 rose to 1.3 percent compared to the 0.1 percent deflation reported in December 2023.
This increase represents the highest month-on-month figure since April 2022. In January 2024, Zone 1 (Northern regions) saw an annual inflation rate of 5.5 percent, Zone 2 (Khomas region) 5.7 percent, and Zone 3 (Hardap, //Karas, Omaheke and Erongo region), registered the lowest zonal annual inflation rate of 5.0 percent.
Food and non-alcoholic beverages remained the primary drivers of inflation, contributing 1.3 percentage points to the headline inflation rate of 5.4 percent in January 2024.
While housing, water, and electricity categories contributed 1.1 percentage points, alcoholic beverages and tobacco contributed 1.0 percentage points, while other categories made contributions below one percentage point.
The report further indicated that services inflation continued to exert pressure on headline inflation, rising to 3.5 percent in January 2024 from 3.1 percent in both January and December 2023, marking the highest level since 2019.
Meanwhile, goods inflation remained steady at 6.8 percent compared to 6.8 percent recorded in December 2023 but slowed down from 9.8 percent in January 2023.
While the food and non-alcoholic beverages category remains the main driver of inflation, the rate of price increases within this category has substantially slowed down.
In January 2024, inflation within this category stood at 6.5 percent, a deceleration from 14.0 percent in January 2023 and 7.4 percent in December 2023, marking the 10th consecutive month of deceleration.
This significant slowdown is attributed to the bread and cereal sub-category, which experienced inflation at a rate of 0.2 percent in January 2024, down from 22.3 percent in January 2023.
This trend aligns with the Food Agricultural Organisation of the United Nations (FAO) food index, which reported that global wheat export prices declined in January due to intense competition among exporters and increased supplies from southern hemisphere nations.
Similarly, maize export prices witnessed a significant decrease, driven by favourable crop conditions and the onset of the harvest in Argentina, coupled with increased supplies in the United States following revised production estimates. Prices of barley and sorghum also followed this downward trajectory.
The fruits subcategory also saw a slowdown in its inflation rate, mainly driven by lower price levels for avocados and watermelons. Equally, mineral waters, soft drinks, and juices experienced a slower rise in prices, particularly in the case of fruit juices and squashes. When comparing prices on an annual basis, only fish, coffee, tea, cocoa, milk, cheese and eggs experienced an increase in their price levels in January 2024.
Consequently, the Economic Outlook for 2024 report, outlined its expectation of a modest short-term increase, primarily influenced by the global rise in fuel and food prices.
However, the overall trend suggests a gradual slowdown in inflation. Forecasts indicate a deceleration from 6.1 percent in the previous year to 5.9 percent in 2023 and further to an estimated 4.9 percent in 2024 in Namibia. This points toward a movement to a more stable cost of living scenario.
