Bank of Namibia governor Tom Alweendo has noted with concern the upward trend in the country’s inflation rate that is fast turning into a disturbing phenomenon. Inflation picked up to 6.9% in April from 6.3% in March, the highest since July 2003 when the annual rate of inflation reached 6.6 percent.

Alweendo said last week in the Monetary Policy Statement that the less favourable outlook was primarily reflected by the sharp increases in transport and food inflation. He said, however, even if transport and food inflation are omitted from the consumer price index, the underlying inflation also shows a significant upward trend, raising concerns of second round effects of transport and food inflation.
“At the same time, there are encouraging signs of a cooling down of domestic demand conditions, as reflected in the latest vehicle sales and credit figures,” he said.
Alweendo said the central bank considers the risks to the outlook for inflation in the medium term to remain tilted to the upside, as inflationary pressures are expected to persist, mainly on account of volatile crude oil prices and expected increases in administered prices in the second half of the year. “There is therefore a need for public utilities to exercise some restraint when considering increases in administered prices in order to contain further inflationary pressures,” he said.