Buckle up as prices continue to rise

PHILLEPUS UUSIKU

For the past year, consumers had to dig deeper in their pockets in order to make ends meet. The year 2021 ended with an inflation rate of 4.5%, an increase of 1.8 percentage points when compared to 2.7% recorded in January 2021.

The annual average inflation rate for 2021 stood at 3.6%, compared to 2.2% in 2020.

According to the Namibia Statistics Agency (NSA), the main contributors to the monthly inflation rate recorded in December 2021 were mainly transport (2.1%), alcoholic and beverage tobacco (0.5%), and hotels, cafes and restaurants (0.4%).

The highest change in the annual inflation rate were mainly witnessed in the categories of transport (14.3%), miscellaneous goods and services (6.9%), food and non-alcoholic beverages (5.1%), NSA said.

Commenting on the statistics, IJG Securities notes that current forecasts are that global oil prices will continue to increase this year with some analysts predicting that a lack of production capacity and limited investment in the sector will result in demand outstripping supply. “We thus expect fuel prices to remain elevated for the majority of 2022,” IJG pointed out

They forecast an average inflation rate of 4.3% year-on- year in 2022 and 3.5% in 2023.

Zones

With regard to the zones, Zone 3 (//Kharas, Erongo, Hardap and Omaheke) recorded the highest inflation rate of 5.5%. Zone 1 (northern regions) and Zone 2 (Windhoek) both recorded an inflation rate of 4.2%.

The increase in the annual inflation rate of Zone 1 resulted mainly from increases in the price levels of transport from 0.2% to 14.2 %, furnishing, household equipment and routine maintenance of the house from 5.0% to 5.5%, health from 2.3% to 3.6%.

The Zone 2 inflation was mainly due to increases in the price levels of transport from -1.8% to 14.0%, miscellaneous goods and services from 5.5% to 7.2% and health from 3.2% to 5.2%.

Lastly, the increase in the annual inflation rate of Zone 3 resulted mainly from increases in the price levels of transport from -3.1%to 14.8%, miscellaneous goods and services from 5.2% to 10.7%, hotels, cafes and restaurants from -0.7% to 4.7% and recreation and culture from 2.1% to 3.3%, the agency said.

Simonis Storm (SS) notes that local inflation during 2021 was driven higher by supply side factors, leading to higher imported merchandise goods prices and oil prices.

“We forecast an average annual inflation rate of 4.7% for 2022, owing to a weaker exchange rate, sustained high global oil prices and higher food prices,” SS said. [email protected]