Cost-of-living squeeze deepens

Higher and higher
From the forecourt to the checkout, costs keep climbing
MW Analytics
  • 35 Minutes Ago

What began as a sharp increase in international energy prices is becoming a broader cost-of-living challenge, with transport, fresh produce, meat and several everyday services recording higher prices.


Annual inflation rose to 5.6% in October, from 5.4% in September and 3.6% a year earlier, according to the latest consumer price figures analysed by Simonis Storm Securities.


It is the highest inflation rate since November 2023 and marks the seventh consecutive monthly increase since inflation reached a low of 2.1% in March.


But the headline figure tells only part of the story.


The more important development is how fuel costs are spreading 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.


The category accounted for almost 44% of headline inflation, contributing 2.5 percentage points to the overall rate.


The increases are particularly significant because transport is not an isolated household expense. It is 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


Fuel prices have risen sharply since March, with the latest adjustment adding further pressure.


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.


The difference is substantial for households and businesses that depend on vehicles.


A 50-litre tank of petrol now costs about N$1 429, compared with N$979 in March. Filling the same tank with diesel costs N$1 543, against N$982 previously.


For transport operators, the increases are even more consequential.


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 do not necessarily remain with transport companies.


Businesses may absorb some of the increases, but others eventually pass them on to customers through higher delivery charges, transport fares and retail prices.


The pressure is already visible in the inflation figures.


Taxi fares increased 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.