It must be with considerable concern that policymakers in Africa are watching events as they unfold in so-called developed economies.During the week, crude oil hit a new historic high at just over US$106 per barrel. Despite recent significant fluctuations, commodities continue to surge keeping the Johannesburg Securities Exchange at an unprecedented extended run above 30 000 index points on the Allshare index. Inflation seems to be out of control, and South African interest rates, out of sync with the First World, just went up another half a percent.

Locally, I found it difficult to contain my joy when the Bank of Namibia had the guts to keep the bank rate on hold. Still, we have to be realistic, prime rates in SA are still lower than in Namibia. Prime in SA will now go to 15% while local banks stubbornly stick to a Namibian prime of 15.25%. Why that is so escapes all logic, but that is the way things are and have been for many years.
The one economic indicator everybody tracks is inflation. Whether the ordinary citizen has loans and mortgages or not, inflation bites in the pocket in a very direct way. And this bug seems to be just as resilient as the price of crude.
All in all, I think we are facing very tough times, at least up until August this year when the new financial cycle in the US and Europe kicks in. Only after that shall we be able to discern the direction of the world economy.
Meanwhile, consumers in Namibia are faced with a continuing deterioration in the purchasing power of their disposable incomes. Transport and food constitute almost half of what the lower income bracket spends in a month and both will continue to be affected by exorbitant fuel prices and rising inflation. To top it all, there is a likely chance that our electricity may go up by as much as 60% before the end of the year.
There is no escape, at least not in the short term.