15 January 2013

Namibia: Consumer Knocked By Inflation in 2012

AVERAGE inflation in Namibia in 2012 hit 6,5% - up from 5,0% in 2011 and 4,5% in 2010.

For December, however, annual inflation took a breather, dropping from 7,6% in November to 6,3% - the first decrease in four months, according to the latest Consumer Price Index (CPI) released by the Namibia Statistics Agency (NSA).

Annual food inflation was the biggest driver of the relief, falling from 11% in November to 8,2%. Also cutting consumers some slack was annual transport inflation, which dropped from 6,7% in November to 5,8% in December.

Despite the decrease, average food inflation for 2012 still came in at 8,8% - compared to 5,1% in 2011. Average transport inflation for 2012 accelerated from 5,2% in 2011 to 7,0%.

Simonis Storm Securities analyst Rudolf Kuschke said in light of the "subdued food and transport inflation, a still relatively weak demand outlook and the possibility of a stronger currency", SSS forecasts an average inflation rate of 6,2% for 2013.

"Recent large jumps in the CPI numbers have made it difficult to forecast, although we expect food inflation and transport inflation to remain relatively subdued in the coming months. Food will be coming off of a relatively high base, while transport inflation will be kept in check by a relatively stable oil price due to weak global demand," Kuschke said.

FBN Namibia expects an even lower average inflation rate for this year.

"We think a combination of disinflation linked to base effects and declining pricing power of retailers, owning to slackened consumer demand into 2014, will slow overall inflation in 2013 and 2014," FNB Namibia senior research and development manager Daniel Motinga said.

Motinga forecasts an average inflation rate of "around" 5,7% in 2013 and 2014.

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