Chamwe Kaira
Inflation in Namibia eased steadily through 2025, creating room for a more accommodative monetary policy stance in the year ahead, according to an analysis by Simonis Storm.
Headline inflation slowed during the second half of the year and closed December at 3.2% year-on-year, down from 3.7% in June. Inflation remained within the Bank of Namibia’s (BoN) 3–6% target range throughout the period. Monthly price movements were mostly muted, apart from occasional utility and tariff increases, pointing to a stable inflation environment.
Beneath the headline figure, the inflation picture shifted. Price pressures became more concentrated in services, especially housing, utilities, education and transport.
These pressures reflected structural challenges rather than excess demand.
Almandro Jansen, an economist at Simonis Storm, said housing and utility costs remained the most persistent source of inflation pressure in 2025.
“Slow land servicing, limited housing supply, recurring municipal tariff increases, and elevated construction and maintenance costs continue to place upward pressure on housing-related inflation,” Jansen said.
Transport inflation, which had declined earlier in the year, picked up in the latter part of 2025.
The increase was driven mainly by higher operating and service costs rather than fuel prices. Food inflation moved in the opposite direction and helped ease overall price pressures. It slowed as regional supply conditions improved, dairy and cereal prices softened and rainfall prospects for the 2025/26 agricultural season improved.
Core inflation averaged above headline inflation during the year.
This showed the persistence of price pressures in non-tradable goods and services, even as imported inflation eased.
Looking ahead, Simonis Storm expects inflation to rise slightly in 2026, averaging between 3.6% and 3.8%. Jansen said this reflects a return to more normal conditions rather than a worsening outlook.
“Housing and utility inflation is likely to remain resilient due to further tariff adjustments, high construction input costs and ongoing supply-demand imbalances in rental markets,” he said.
Services inflation is expected to stay firm, especially in education, healthcare and personal services.
Core inflation is also likely to remain higher than headline inflation. External factors are expected to help contain price pressures. Softer global oil prices and a stronger South African rand, and by extension the Namibian dollar, have reduced imported fuel and goods inflation.
Given Namibia’s reliance on imported fuel and intermediate goods, these trends should help limit knock-on effects across transport, logistics and food distribution.
Better rainfall conditions are also expected to support agricultural output and keep food inflation in check into 2026.
The overall inflation outlook remains within the central bank’s target range. Jansen said this gives the Bank of Namibia scope to ease monetary policy further to support economic activity without threatening price stability.
Simonis Storm expects the central bank to cut the repo rate twice by 25 basis points in 2026, bringing the policy rate to 6.00%.
Any easing is expected to be gradual and guided by incoming data, aligned with South Africa’s policy path and dependent on inflation expectations remaining anchored.
Caption
Headline inflation moderated during the second half of the year.
- Photo: Contributed
