NAMIBIANS who did not have their incomes increase by at least 6,1% last year ended the year poorer than they were at the beginning.
This is because overall prices of goods and services on average increased at that pace every month.
To have a gain in 2023, analysts estimate they should at least increase their incomes by 5% to counter the ever-increasing prices of goods and services.
Salaries last year mildly edged up with few companies announcing a salary increment of above 6,1% and the government only announced a 3% salary increment for civil servants.
Some analysts say salary stagnation has strained households, while others say income has not stagnated, with individuals supplementing their annual incomes through other means.
The Bank of Namibia (BoN) has estimated that inflation would close the year just above 5%, but the ideal would be an inflation rate of 4,2%.
Seeing that it is still above 6%, another interest rate hike could be coming up during the first half of 2023.
Data as released by the Namibia Statistics Agency (NSA) shows inflation for the festive period was recorded at 6,9% and averaged 6,1% in 2022 - up from 3,6% in 2021.
Compared to November 2022, which recorded a 7% rate, December's easing of an increase in the price of goods and services was largely driven by the decrease in the fuel price, although food prices continued upward.
An inflation rate of below 7% may be good for interest rates, but food inflation, which ended the year at 11,8%, remains a risk.
It was only the food and non-alcoholic beverages inflation category that reported a month-to-month increase for December, while others remained flat.
Pieter du Preez, an economist with Oxford Economics, says he expects food price inflation to peak in the first quarter of 2023 before subsiding for the rest of the year.
"The elevated global maize price and Namibia dollar weakness will keep upward pressure on food price inflation in 2023," he says.
According to the NSA, the annual inflation rate in December 2022 increased by 6,9% compared to 4,5% recorded in December 2021.
The main contributors to the annual inflation rate were transport (2,2 percentage points), food and non-alcoholic beverages (2,2 percentage points), alcoholic beverages and tobacco (0,6 percentage points), and housing, water, electricity, gas and other fuels contributed (0,2 percentages points).
The zonal inflation rates for December 2022 revealed that Zone 2 (Khomas) recorded an annual inflation rate of 7,6%.
Zone 1 (the Kavango East, Kavango West, Kunene, Ohangwena, Omusati, Oshana, Oshikoto, Otjozondjupa, and Zambezi regions) recorded annual inflation rates of 6,5%, while Zone 3 (the //Kharas, Erongo, Hardap, and Omaheke regions) recorded an annual inflation rate of 6,4%.
On a monthly basis, Zone 1 and Zone 2 both registered an inflation rate of 0,3%, and Zone 3 recorded an inflation rate of 0,2%.
The annual inflation rate for goods was estimated at 9,6%, while the annual inflation rate for services stood at 3,1%.
Du Preez says successive rounds of upward fuel-price adjustments last year due to the rising Brent crude oil price and a weaker domestic currency saw domestic fuel prices climb by 28%.
Transport price inflation, which accounts for 14,3% of the overall consumer basket, averaged 17,4% in 2022, up from 7,3% in 2021.
"We foresee transport price inflation to remain in double digits in the first quarter of 2023 due to base effects, but that it would ease significantly over the remainder of the year thanks to the lower global oil price.
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"This will see transport inflation averaging 3,8% year on year," he says.
He says based on the above factors, coupled with weaker domestic demand and higher interest rates, he expects the average inflation rate to moderate to 5% this year.
"The Bank of Namibia raised the repo rate by a cumulative 300 basis points (bps) in 2022 to combat rising inflation and to maintain the one-to-one currency peg to the South African rand.
"We expect that the central bank will raise its policy rate by a further 50 bps to 7,25% in the first quarter of 2023, in line with the policy of the South African Reserve Bank," he says.
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Twitter: @Lasarus_A
