Headline inflation slightly increased to 3.7% in August from 3.65 in the previous month, mainly due to higher food, beverages, furniture, and household appliance price inflation, according to the latest consumer price index released by the Namibia Statistics Agency.
Looking at the major sub indices, the food non alcoholic beverages sub index was the biggest contributor to the slightly higher annual inflation rate. There was a notable jump in the fish, vegetables, and coffee, tea cocoa price categories compared to a year ago. Furthermore, the alcoholic beverages tobacco sub index increased on the back of higher alcohol prices.
The headline inflation rate has declined steadily since November 2018 (when it reached a peak of 5.6%), and averaged 4.2% over the first eight months of 2019.
Shelly Arnold, PSG Namibia Research Analyst said the recent currency weakness has eased, in line with increased expectations of looser monetary policy in developed countries which has boosted emerging market currencies, and expectations that Moody's will not downgrade South Africa's sovereign credit rating.
"We forecast inflation to moderate to 4% in 2019 compared to 4.3% in 2018 on the back of our expectation that relatively low housing and food price inflation will keep overall inflation in check. We currently see a possibility (40% probability) of another 25 bps repo rate cut by the end of the year," Arnold noted.