Average inflation for 2011 clocks at 5%

ANNUAL inflation in December spiralled up to 7,2 per cent from 6,0 per cent the previous month, bringing Namibia’s average inflation rate for 2011 to 5,0 per cent.

Last year’s average is a significant jump from the 3,4 per cent average recorded in 2010, but is still far below the 9,6 per cent of 2009 and the 12,2 per cent of 2008.Commenting on the latest figures, Simonis Storm Securities (SSS) said inflation is likely to continue its upward trend in the near future, driven by food prices.’There could also be upward surprises caused by electricity increases, which we believe has not been priced in yet.’SSS expects an average inflation rate of 7,2 per cent for 2012.Capricorn Investment Holdings (CIH) also believes that inflationary pressures will remain on the upside ‘through the first half of 2012 and possibly beyond’. However, it doesn’t expect the Bank of Namibia (BoN) to hike its repo rate, saying it is likely to stay at 6,0 per cent during the first quarter, ‘and probably the second quarter too’.December’s figure of 7,2 per cent hasn’t only burst through the upper inflation target limits set by most central banks in the region; it also marks the highest level of inflation in Namibia since August 2009, CIH said.Last month’s increase was, as in most previous months, driven by a jump in food inflation. December’s figure stood at 9,2 per cent, up from 6,7 per cent the previous month.Inflation for bread and cereals, meat, milk, cheese, eggs and vegetables were all up: meat from 10,9 per cent to 11,1 per cent; cheese and eggs from 1,7 per cent to 3,6 per cent; and vegetables from 5,3 per cent to 9,9 per cent.Bread and cereal inflation rose from 5,6 per cent in November to 12,5 per cent in December. ‘An increase in bread and cereal was expected due to the trend increases in wheat and maize prices from June 2010 until the third quarter of 2011, as upward price pressures in cereals experienced over the past 18 months have been transmitted into Namibian cereal prices,’ CIH said.Fruit, as well as oils and fats recorded drops in inflation. Transport inflation accelerated from 6,6 per cent in November to 7,8 per cent. ‘The increase in transport inflation, while crude prices have decreased, can be attributed to the weakening exchange rate increasing the price of oil in Namibia dollar,’ CIH said.The annual rate of services’ inflation went up from 4,6 per cent in November to 5,4 per cent in December. Goods inflation increased from 6,8 per cent to 8,3 per cent.