Namibia’s headline inflation slowed to 3.2% year on year in August, marking the lowest rate so far this year.
While this continues the disinflationary trend seen since late 2023, the outlook suggests that inflation will gradually pick up again toward 3.7% to 3.9% by December, as several pressures begin to build.
Food inflation remains the main driver, holding steady at 5.2% year on year. Strong increases in fruit, meat, and vegetables continue to weigh heavily on household budgets, and global trends are not offering much relief. The latest FAO Food Price Index shows renewed strength in vegetable oils and meat, both of which are likely to filter through to local prices in the months ahead.
With Namibia still exposed to regional drought risks and high import costs, food inflation is expected to remain stubbornly above 5%.
Transport is still providing a cushion, recording -1.0% year on year in August as fuel prices fell sharply compared to last year. However, this drag on inflation will fade as we move closer to year-end.
Base effects from last year’s fuel declines are already softening, while Brent crude remains vulnerable to OPEC+ supply cuts and geopolitical uncertainty. If oil prices or the Namibian dollar move unfavourably, fuel costs could rebound, pushing transport inflation back into positive territory.
Housing and utilities’ inflation eased to 3.4% year over year, but rents remain under pressure, rising by 3.7% year over year.
Rental markets in Windhoek, Swakopmund, and Walvis Bay are overheated, with demand far outpacing available supply. This imbalance is unlikely to resolve in the short term, keeping rental costs on an upward path and ensuring that housing remains a persistent source of inflationary pressure.
On top of domestic drivers, external risks add another layer of uncertainty. The 30% US tariffs on South African exports raise the risk of higher landed costs for Namibia, particularly in vehicles, machinery, and processed food. Any weakness in the South African rand would further amplify these pressures, feeding into imported inflation.
Overall, while August’s reading delivered welcome relief, it is unlikely to last. Food and rental inflation remain sticky, transport’s drag is set to weaken, and external trade risks could quickly add cost pressures. Against this backdrop, inflation is expected to edge higher to around 3.7% to 3.9% by December, keeping the outlook tilted to the upside as 2025 draws to a close.
Despite the stabiliser in August, persistent upside risks in meat, oil, and fruit prices suggest that food will remain a key driver of overall inflation in the months ahead. – Simonis Storm Securities
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Inflation is expected to increase towards year end
