Namibia Consumer Price Index FEBRUARY 2020 TABLE OF CONTENTS PREFACE 3 Key highlights 4 Contributions of the different groups to the annual percentages change in NCPI 4 Overall inflation rate 5 Annual inflation rate by main categories 6 Selected main categories annual inflation rate 7 Goods and Services inflation rate 15 NCPI basket weights 16 Table 1 Namibia CPI; All – Items Index, monthly and annual percentage changes 17 Table 2 Namibia CPI; By main groups and sub groups 18 Zonal CPIs 20 Annex 1: Background on Zonal Consumer Price Index 23 Annex 2: Zonal CPI weights 24 Additional detailed information on zonal CPIs 25 PREFACE This report examines the monthly inflation rate performance in Namibia as measured by the Consumer Price Index. The Namibia Consumer Price Index (NCPI) is used as the basis to calculate the rate of inflation as experienced by consumers. More than 9000 prices of goods and services are collected on a monthly basis from more than 900 retail outlets in 8 localities. The NCPI weights represent the expenditure share of each commodity in the 2009/10 Namibia Household Income and Expenditure Survey. The Consumer Price Index is published about 15 days after the end of the reference month to which it relates. The inflation rate measures the change in the NCPI for the month under review to the previous month (month-on-month change) as well as to the corresponding month in the previous year (year-on-year change). The inflation rate is vital for purposes of economic policy-making, especially the conduct of monetary policy and to consumers in general. It is further used in a wide variety of public and private contracts for the purposes of adjusting payments (such as wages, rents, interest and social security benefits). It therefore, has substantial and wide- ranging financial implications for governments and businesses, as well as for households For the month of February 2020, the annual inflation rate eased to 2.5 percent from 4.4 percent recorded in February 2019 while on a monthly basis, the inflation slowed to a 0.3 percent from 0.6 percent. The slow growth in annual inflation is largely attributed to the decline of 0.5 percent that was registered in Housing, water, electricity, gas and other fuels category compared to a growth of 1.9 percent recorded during the same period a year earlier. Looking at the inflation rates by Zones, in February 2020, the annual and monthly inflation rate for Zone 1 (Kavango East, Kavango West, Kunene, Ohangwena, Omusati, Oshana, Oshikoto, Otjozondjupa, and Zambezi) stood at 2.8 percent and -0.1 percent, respectively. While, for Zone 2 (Khomas) inflation stood at 2.1 percent year on year and 0.8 percent month on month; and for Zone 3 (//Karas, Erongo, Hardap and Omaheke) inflation was 2.5 percent year on year and 0.3 percent month on month. Alex Shimuafeni Statistician-General & CEO NAMIBIA CONSUMER PRICE INDEX Annual inflation rate continues to slow down. Annual inflation rate slowed to 2.5 percent in February 2020 from 4.4 percent recorded in February of the previous year. On a monthly basis, it slowed to 0.3 percent from 0.6 percent. Box 1: Key highlights o The annual inflation rate was at 2.5 percent o The annual inflation rate for Goods was estimated at 3.5 percent o The annual inflation rate for Services stood at 1.1 percent o The average annual inflation rate for February 2019 to February 2020 stood at 3.4 percent. o The twelve-month average annual inflation rate for March 2019 to February 2020 was at3.3 percent BOX 2: Contributions of the different groups to the annual percentages change in NCPI Groups Contributions (%) January 2020 February 2020 Food and non-alcoholic beverages 0.4 0.5 Alcoholic, beverages, tobacco & narcotics 0.4 0.4 Clothing and footwear 0.0 0.0 Housing, water, electricity, gas & other fuels -0.3 -0.1 Furnishings, household equipment 0.1 0.2 Health 0.1 0.1 Transport 0.7 0.6 Communication 0.0 0.0 Recreation and Culture 0.1 0.2 Education 0.3 0.3 Restaurants and hotels 0.0 0.0 Miscellaneous goods and services 0.3 0.3 All items 2.1 2.5 4 NAMIBIA CONSUMER PRICE INDEX Overall inflation rate In February 2020, the annual inflation increased by 2.5 percent, down from 4.4 percent recorded in February 2019, a decrease of 1.9 percentage points (Chart 1). The deceleration in the annual inflation between February 2020 and February 2019 was mainly reflected in the category of Housing, water, electricity, gas and other fuels (-0.5 percent from 1.9 percent in February 2019) which accounts for 28.4 percent of the overall NCPI basket. Another category that contributed to the deceleration of the inflation was the Food and non- alcoholic beverages (2.8 percent from 5.9 percent in February 2019) which accounts for 16.5 percent of the overall NCPI basket. For the period between February 2019 and February 2020, the lowest annual inflation rate was registered in January 2020 at 2.1 percent while the highest rate of 4.5 percent was observed in the months of March and April 2019, respectively. The monthly inflation rate slowed to 0.3 percent in February 2020 compared to 0.6 percent recorded in the preceding month. Chart 1: NCPI; Monthly and annual percentage changes; February 2020 (Dec 2012 = 100) 5 NAMIBIA CONSUMER PRICE INDEX Annual inflation rate by main categories Looking at the inflation rates by main categories, the highest inflation rate during February 2020 when compared to February 2019 was observed in Education at 7.6 percent followed by Miscellaneous goods and service (6.2 percent); Recreation and culture (4.4 percent) and Transport (4.4 percent). While, Clothing and footwear and Housing, water, electricity, gas and othef fuels recorded deflation of -1.3 percent and -0.5 percent, respectively (Chart 2) during the month of February 2020. Chart 2: NCPI; annual percentage changes by all groups, February 2020 (Dec 2012 = 100) 6 NAMIBIA CONSUMER PRICE INDEX Selected main categories’ annual inflation rates Food and non-alcoholic beverages The annual inflation rate for this category stood at 2.8 percent in February 2020 compared to 5.9 percent registered during the same period last year, a decrease of 3.1 percentage points. The slow growth in this group emanated from decreases recorded mainly in the price levels of Vegetables including potatoes and other tubers (from 16.4 percent to 6.5 percent), Bread and cereals (from 10.1 percent to 0.0 percent), Coffee, tea and cocoa (from 5.4 percent to 4.0 percent), Mineral water, soft drinks and juices ( from 2.4 percent to 0.5 percent), Sugar, jam, honey, syrup, chocolate and confectionery (from 3.9 percent to 2.3 percent) and Meat (from 3.6 percent to 2.0 percent). The monthly inflation rate for this category dropped to 1.0 percent from 2.2 percent recorded a month earlier. Chart 3: NCPI; Annual inflation rates for selected food sub-categories; February 2020 (Dec 2012 = 100) 7 NAMIBIA CONSUMER PRICE INDEX Alcoholic beverages and tobacco The annual inflation rate for the Alcoholic Beverages and tobacco group stood at 2.7 percent in February 2020 compared to 6.2 percent registered in February 2019, resulting in a decrease of 3.5 percentage points. The downward movement of inflation rate in this category during this period was mainly due to the decline in the price levels of Alcoholic Beverages and Tobacco sub-components which dropped from 6.5 percent to 4.4 percent and 4.9 percent to -4.4 percent, respectively. The monthly inflation rate for this group increased to 0.4 percent compared to 0.1 registered a month earlier. Chart 4: NCPI; Annual inflation rate for Alcoholic beverages and Tobacco; February 2020 (Dec 2012 = 100) 8 NAMIBIA CONSUMER PRICE INDEX Transport During February 2020 the annual inflation rate for the Transport component stood at 4.4 percent, resulting in a decrease of 3.1 percentage points from 7.5 percent recorded in February 2019. The decrease emanated mainly from declines registered in the price levels of Purchase of vehicles (from 5.0 percent to 3.8 percent) and Public transport services (from 19.9 percent to 0.0 percent). The monthly inflation rate for this group remain unchanged at 0.2 percent. Chart 5: NCPI; Annual inflation rate for Transport; February 2020 (Dec 2012 = 100) 9 NAMIBIA CONSUMER PRICE INDEX Housing, water, electricity, gas and other fuels The annual inflation rate for Housing, water, electricity, gas and other fuels category deflated by -0.5 percent in February 2020 compared to an increase of 1.9 percent recorded during the same period a year earlier. The decrease originated from the declines registered in Rental payments for dwelling (both owners and renters) which decreased from 2.3 percent to -2.3 percent. On a monthly basis, the inflation rate for this group Increased to -0.4 percent from -1.2 percent recorded last month. Chart 6: NCPI; Annual inflation rate for Housing, water, electricity, gas and other fuels; February 2020 (Dec 2012 = 100) 10 NAMIBIA CONSUMER PRICE INDEX Miscellaneous goods and services The Miscellaneous goods and services component recorded the second highest annual inflation rate in February 2020, recording 6.2 percent, up from 1.8 percent recorded in the same period last year. The increase resulted mainly from increases registered in Personal effects n.e.c (from 0.7 percent to 2.7 percent), Insurance (from -10.2 percent to 5.0 percent), Financial services n.e.c (from 7.1 percent to 10.7 percent) and Other services n.e.c (from 2.7 percent to 9.0 percent).