Simonis Storm has warned that Namibia’s annual inflation will soon breach the 7% mark due to global supply chain bottlenecks caused by Russia’s invasion of Ukraine.
This was after the country’s annual inflation rate for June 2022 stood at 6% from 4.1% recorded in June 2021, an increase of 1.9 percentage points. This is the highest inflation rate that the country has recorded since June 2017, according to the Namibia Statistics Agency (NSA).
“Recent inflation prints are closer to what we forecasted for mid-2022 when we revised our average annual inflation rate forecast for 2022 from 6.1% to 7.1% in April 2022,” said Simonis Storm Economist, Theo Klein.
“While we might have been more aggressive in our inflation forecast, however low inflation rates recorded in the first few months of 2022 are over in our view. Supply chains are likely to remain expensive in 2023 even if the war in Ukraine ends during 2022 as it will take time to repair damaged or destroyed transport infrastructure. This will be one of many factors keeping inflation elevated in advanced economies and Namibia in 2023. We are not of the view the inflation in advanced economies will drop back to central bank targets (mostly 2%) next year, for other reasons as well.”
On a monthly basis, Namibia recorded inflation an rate of 1% in June 2022 compared to 0.1% registered during the preceding month.
According to the NSA, the growth in the monthly inflation rate was mainly caused by transport at 4.1% compared to a deflation of 1.2% recorded a month earlier.
