Staff Writer
Simonis Storm expects inflation to average between 3.6% and 3.8% in 2026. The firm says this reflects a mild normalisation rather than a renewed rise in price pressures.
The outlook follows a year of easing inflation in 2025. Headline inflation slowed through 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 3–6% target range. Monthly price movements were mostly stable outside of utility and tariff adjustments.
For 2026, Simonis Storm expects housing and utility inflation to remain firm.
This will be supported by tariff increases, construction cost pressures and tight rental markets. Services inflation, especially in education, healthcare and personal services, is also expected to remain elevated, keeping core inflation slightly above headline inflation.
Transport costs, however, are expected to ease in the near term. The transport category is forecast to turn deflationary in February 2026 following a decline in global oil prices.
The Ministry of Industries, Mines and Energy has announced fuel price cuts for February. Petrol will decrease by N$1.00 per litre and diesel by 50 cents per litre.
“Given fuel’s weight within the transport sub-basket, this adjustment will place downward pressure on transport inflation and may temporarily soften headline CPI in the first quarter of 2026. Lower fuel costs also reduce second-round pressures through logistics, food distribution, and operating expenses for businesses,” Simonis Storm said.
The firm said external conditions will also help contain price pressures.
“A firmer South African rand and, by extension, the Namibian dollar have helped contain imported fuel and goods inflation. Given Namibia’s heavy reliance on imported intermediate goods, this reduces pass-through into transport, construction materials, and retail pricing. Improved rainfall conditions further strengthen the outlook for food supply, reinforcing moderation in agricultural prices rather than cyclical concentration in housing and administered components, not driven by broad-based demand expansion.”
Simonis Storm said inflation in 2026 is expected to remain within target.
“Price pressures are expected to remain structural. This environment provides the Bank of Namibia with measured policy flexibility. With inflation contained and growth still fragile, we expect the BoN to implement two 25 basis point repo rate cuts in 2026, bringing the policy rate to 6.00%. Any easing is likely to remain gradual and data-dependent, aligned with South Africa’s trajectory and contingent on inflation expectations staying anchored.”
Caption
Inflation is expected to average between 3.6% and 3.8% in 2026.
– Photo: Contributed
