Cost-of-living squeeze deepens in Namibia

Namibia is experiencing a deepening cost-of-living crisis as fuel prices continue to rise, driving inflation to 5.6% in October, up from 5.4% in September and 3.6% a year earlier. This marks the seventh consecutive monthly increase in inflation, which had reached a low of 2.1% in March. The latest consumer price figures analysed by Simonis Storm Securities show that the cost of living is becoming increasingly expensive for Namibians.

The main driver of the rising inflation is the sharp increase in fuel prices, which has spread beyond the petrol station and into the prices consumers pay for goods and services. Transport inflation reached 16.5% in October, up from 14.9% in September and just 2.1% a year earlier. This category accounted for almost 44% of headline inflation, contributing 2.5 percentage points to the overall rate. As fuel prices continue to rise, the cost of transporting goods and services is becoming more expensive.

The recent fuel price adjustments have added further pressure on households and businesses that depend on vehicles. From 4 November, petrol at Walvis Bay increased to N$28.58 a litre, while diesel 50ppm climbed to N$30.86. Compared with March, petrol is now N$9 more expensive per litre, while diesel has increased by N$11.23. This substantial difference is likely to have a significant impact on the budgets of households and businesses.

The impact of the fuel price increases is being felt across various sectors, including transport operators. Simonis Storm estimates that a truck carrying 160 litres of diesel now costs about N$4 938 to fill, compared with N$3 141 in March. A fleet consuming 10 000 litres of diesel a month faces an additional N$30 000 in fuel expenses following the November increase alone. These costs are likely to be passed on to customers through higher delivery charges, transport fares, and retail prices.

The pressure of rising fuel prices is already visible in the inflation figures, with taxi fares increasing by 15.4% year on year, airfares by 22.9%, rail fares by 15.7%, and goods transport by 9.6%. For consumers, this means that the cost of travelling to work, visiting family, or transporting goods is becoming more expensive. For businesses, it means higher operating costs at a time when customers are already facing pressure on their disposable incomes.

The cost-of-living crisis is likely to have a significant impact on the economy, as transport is not an isolated household expense but an input into almost every part of the economy. From moving agricultural produce and mining supplies to distributing food and delivering services, the cost of getting around is essential for businesses to operate. As fuel prices continue to rise, businesses may absorb some of the increases, but others will eventually pass them on to customers through higher prices.

The rising cost of living is a concern for Namibians, as it erodes the purchasing power of households and reduces their disposable incomes. As inflation continues to rise, households and businesses will need to adjust to the new reality of higher prices and find ways to mitigate the impact of the cost-of-living crisis. The government and businesses will need to work together to find solutions to address the root causes of the crisis and support those who are most affected.

Key points

• Fuel prices have driven inflation to 5.6% in October, up from 3.6% a year earlier.
• Transport inflation reached 16.5% in October, accounting for almost 44% of headline inflation.
• The cost of fuel is spreading beyond the petrol station and into the prices consumers pay for goods and services.