Fuel remains spoke in wheel

Transport inflation highest in more than 4 years

14 September 2018 | Ekonomie
Jo-Maré Duddy – Fuel and electricity, some of the top items in the Namibian consumer basket, registered double-digit inflation in August.

Data released by the Namibia Statistics Agency (NSA) yesterday shows inflation for the operation of personal transport equipment, which includes fuel, reached 12.6% last month, up from 11.8% in July. As a result, overall transport inflation sped up from 8.9% to 9.7%. In August 2017, fuel inflation stood at 1.9% and the rate for overall transport was 2.0%.

Transport has a weight of 14.28 in the consumer basket, which means consumers spend N$14.28 out of every N$100 in their pockets on it.

Commenting on the new inflation figures, Klaus Schade, a research associate of the Economic Association of Namibia (EAN), said transport inflation is now the highest in more than four years.

The operation of personal transport equipment accounts for 63% of the transport category and contributes almost 9% to the overall inflation rate, according to Schade.

The inflation rate for electricity, gas and other fuels rose from 8.4% in July to 13.2% last month. This fuelled the increase in overall inflation for housing, water and electricity from 3.7% to 4.4%. A year ago, electricity inflation was 8.4% and that of the overall category stood at 8.3%.

At 28.36, housing, water and electricity weigh the most in the consumer basket.

Food

Food and non-alcoholic beverages is the second most important item in the basket with a weight of 16.45.

August’s inflation rate for food and non-alcoholic beverages was 2.7%, down from 2.9% the previous month and the lowest since February this year. In August 2017 the rate was 4.2%.

The rate of only two items in the food basket increased. Inflation for bread and cereals rose from 1.5% to 2.6%. A year ago, bread and cereals was in deflation with a rate of -0.5%.

Inflation for meat increased from 5.1% in July to 6.0% last month. In August 2017 it was 8.9%.

Big decreases in inflation were recorded in fish and fruit. Fish inflation dropped from 7.6% in July to -0.5%. A year ago, it was 14.7%. Fruit inflation fell from 12.7% to 7.9%. In August last year, fruit inflation was 6.8%.

Outlook

EAN expects inflation to pick up again owing to the fuel price increase of 40c per litre this month.

“Fuel price increases have a direct impact on transportation costs and over time on the costs of other products that have to be transported. Furthermore, the depreciation of the Namibia dollar against other currencies such as the US dollar and Chinese yuan will push up prices for other imported products in the coming months,” Schade said.

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