Chamwe Kaira
FNB Namibia has revised its inflation forecast slightly lower and now expects headline inflation to reach 3.5% year-on-year by December 2025, compared to its earlier projection of 3.7%.
FNB economist Helena Mboti said the adjustment was driven by lower-than-expected food prices, prolonged transport deflation, weak domestic demand, and favourable currency movements due to a weaker US dollar.
She noted that pressures remained in food, housing and utilities, and alcohol, which together added 2.6 percentage points to headline inflation in August, down from 2.93 points in July.
“At the same time, transport continues to weigh on overall inflation (-0.2 ppts), though base effects suggest this drag will fade in 2026. In the absence of new external shocks, we expect headline inflation to rise cyclically in early 2026,” Mboti said.
Headline inflation eased to 3.2% year on year in August, down from 3.5% in July and below FNB’s expectation of 3.5%. Mboti said improved rainfall boosted regional crop output and eased food price pressures.
Food inflation slowed from 6.1% year on year in July to 5.2% in August. She said the moderation was driven by softer prices in bread and cereals (+2.2%), milk, cheese and eggs (+1.5%), and other food categories (+3.6%). However, meat and fish (+8.3%), fruit (+16%), and vegetables (+7.2%) remained high.
Transport inflation stayed negative at -1.0% year on year in August, compared to -1.2% in July and -2.2% in June.
Mboti said the gradual improvement signals stabilisation in the category. Transport continues to act as a drag on headline inflation, though the effect is fading.
Housing, water, electricity, gas and other fuel inflation slowed to 3.4% in August, down from 3.6% in July and 4.1% in August 2024. “The moderation was mainly due to lower electricity tariffs, underpinned by higher domestic generation, but this was offset by higher water supply and sewerage costs, which accelerated to 4% from 1.7% in August 2024,” Mboti said.
Core inflation eased to 3.6% year on year in August, compared to 3.9% in July and 3.8% a year earlier. Mboti said it remains above headline inflation, showing sticky pressures in services and rentals.
Looking ahead, she says housing will continue to face opposing pressures, with electricity generation expected to normalise while demand gradually increases.
Caption
FNB Namibia economist, Helena Mboti.
- Photo: Contributed
