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The inflation rate experienced by different segments of the population often differs from the reported headline inflation of a country, as socioeconomic groups have varying consumption patterns. More often than not, the true inflation rate experienced by the urban and wealthier population is lower than the reported headline inflation rate, while being higher for the rural and poorer population.The Namibia Household Income and Expenditure Survey (NHIES) 2015/16 provides different consumption patterns by income decile and region. Using this, a unique inflation rate can be calculated for both urban and rural populations, as well as for different income deciles.Over the past ten years, the inflation rate for the rural population has been higher than that for the urban population in 88% of the months since January 2014. The same is true for households in the bottom 10% of income earners compared to those in the top 10%.According to the NHIES 2015/16, 36.3% of total expenditure by Namibian households went to food, beverages (both non-alcoholic and alcoholic), and tobacco. However, a very strong relationship exists between the level of urbanisation in a region and the percentage of relative consumption allocated towards these goods, given that relative income (and thus expenditure) levels in rural regions are significantly lower than in urban regions and food is a necessity.Given that Namibia is a net importer of crucial items such as food and fuel, the country is susceptible to global events causing volatility in the prices of these goods. Food, Beverages & Tobacco is the only basket in the NHIES 2015/16 where relative consumption and urbanisation rates are negatively correlated (the more urban a region is, the less is spent on food as a percentage of total expenditure/consumption).Since a relatively greater proportion of the urban population is in formal employment, more of these individuals stand to benefit from cost-of-living adjustments from their employers. Additionally, given their relatively greater wealth levels, more of the urban population can hedge against inflation via interest-bearing accounts, downward substitution and other activities intended to protect their purchasing power.This helps explain why the Namibian population has reached an all-time low in confidence regarding the reduction of inequality, with only 9% of surveyed Namibians in the 2024 Afrobarometer believing the government is doing well in reducing income inequality. Meanwhile, only 14% believe so regarding controlling price stability (also an all-time low). Namibia&#039;s Gini coefficient stands at 59.1 according to the NHIES, making it the second most unequal country in the world behind South Africa.However, the underlying issue centres on employment creation and poverty reduction, and it is no surprise to learn that these are also two areas in which Namibians are losing confidence in the government&#039;s handling, with all-time lows of 12% and 17%, respectively.

Chart of the week

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Republikein 2026-02-02

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Chart of the week

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Republikein 2026-02-02

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