afrol News, 14 July - For the first time in more than five years Namibia's inflation has reached a two-digit level. From 9.7% in May, inflation shot up to 10.3% in June, said Namibia's Central Bureau of Statistics (CBS).

This comes at a time when the country is faced with soaring prices of food and fuel.

Despite the high inflation, the Central Bank maintained its prime lending rate of 10.5% in the first half of 2008.

CBS said food, transport and electricity costs continue to stoke inflationary pressures on a monthly basis.

Some weeks ago, the Central Bank issued a statement saying in the interest of boosting consumer spending, it would not change its 10.5% benchmark rate.

The Bank of Namibia also chose to sustain economic growth instead of tighten control over inflation. This is the first time the bank is deviating from its usual policy by holding rate for six months. It has not this time followed the banking practice in South Africa where interest rates have been increased six time since June 2007.

On 1 July, the Central Bank blamed the Southwest African country's slow economic growth to the 27% fall in the diamond output. The mining sector has been the mainstay of Namibia, a country that produces the world's best quality diamonds.

Majority of Namibians are now reeling with fears that the slow economic growth could force the government to revise its 2008 economic growth projections.

By staff writer

© afrol News

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