Namibia food prices to increase further

Namibia’s food prices are expected to rise further during the course of 2022. This is mainly driven by the global energy crisis and production risks due to supply disruptions caused by the Russia /Ukraine war.

“These price hikes of inputs in the production of goods and services have serious implications for prices of a basket of food in the short to medium term. In addition, prices are expected to rise further throughout 2022 due to energy crises, trade risks, removal of Russian banks from The Society for Worldwide Interbank Financial Telecommunication (SWIFT) and production risks due to supply disruptions caused by the war,” financial services company, First Capital said in its Food Price Monitor report.

This comes as average food prices in the first and second quarter of 2022 rose by 1.9%, 4.4%, 5.5% and 2.7% in Coastal areas, Northern areas, Southern areas and central parts of the country respectively, according to First Capital.

“First Capital’s basket of food on average coastal areas recorded N$2,086.36 in the second quarter, compared to N$2,046.58 recorded during the first quarter. On the other hand, the average price of a basket of food was the lowest in central areas, this could be explained by the fact that most warehouses are situated in central areas. Interestingly, a basket of food in coastal areas was cheaper than in the southern and northern areas during the second quarter, they recorded N$ 2,109.09 and N$ 2,102.84 respectively. This can be attributed to the distance from central areas and the cost of fuel at the coastal areas, which is much cheaper than the rest of the country,” the report said.

Food price inflation by category shows the price of the most perishable food category whereby fruits rose by 16.1% (year on year) on average during the second quarter of 2022.

“Within this category, the highest price inflation was that of avocados and citrus fruits which increased by 72.4% and 8.26% respectively. However, prices of grapes and watermelons dropped by 3.9% and 3.3% on account of increased supply on local markets.”

Meat prices on average rose by 3.79% during the second quarter of 2022 according to the report, following an increase of 7.39% during the first quarter of 2022.

“The price increase was the highest for offals and meat waste and canned meat with average inflation rates of 17% and 15.7% (y/y) during the second quarter and 18.2% and 12.6% (y/y) percent during the first quarter of 2022 respectively. This is partly resultant because of the supply shortfalls created by climate conditions (drought) which were experienced in Southern Africa over the past few years. On the other hand, high price increases of livestock meat are attributed to low supply levels of livestock marketed both for local and export markets mainly due to ongoing herd restocking by farmers.”

Dairy & eggs recorded price increases of 4.39% and 4.72% (y/y) on average during the second and first quarters of 2022 respectively.

A noticeable high price increase of 14.2% in coffee was observed during the second quarter while the price of tea fell by 0.2%.

“This trend presents an opportunity for consumers to trade-off on the consumption of the two commodities. Similar tendencies were seen during the first quarter of the year when an average increase of 9.9 percent was recorded for coffee and a fall of 0.4 percent for tea.”

According to PSG Namibia, Namibian fuel prices have sky rocketed by over 60% y/y in July , with CPI inflation forecasted to accelerate from an average of 3.6% in 2021 to 5.9% this year, mainly due to higher fuel and food prices.

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Last modified on Thursday, 11 August 2022 06:26

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