Namibia experiencing a rapid slowdown in inflation

Martin Endjala

Namibia is currently experiencing a more rapid slowdown in annual inflation than anticipated.

This was said on Tuesday by an economic researcher at Simonis Storm Securities, Halleluya Ndimulunde who was responding to the recently released economic outlook report, stating that this marks a deceleration from the 7.2% recorded in March 2023 and 5.0% in February 2024.

In March 2024 the country saw an annual inflation rate of 4.5%, the lowest since July 2023.

“Monthly inflation remained unchanged, consistent with the rate reported in the previous month (0.0 %). The primary contributor to headline inflation remains the food and non-alcoholic beverages category, contributing one percentage point in March 2024, although this marks a slowdown from the 2.7 % points recorded in March 2023,” she said.

Ndimulunde also noted that the alcoholic beverages and tobacco category contributed 0.9 % points while housing, water, electricity, gas and other fuels contributed 0.8% points, and transport accounted for 0.7% points to headline inflation of 4.5%.

Stating that there are potential risks to inflation, particularly in food prices, which could be worsened by the El Niño weather phenomenon, alongside elevated oil prices.

According to the United Nations Food and Agriculture Organization (FOA), in March 2024, the FAO Food Price Index showed a 7.7% decrease, averaging 118.3% points.

However, it increased by 1.1%, primarily due to rising oil prices.

The FOA said the increase was influenced by lower outputs in major oil-producing countries due to seasonal factors and strong domestic demand in Southeast Asia.

Bank of Namibia Governor Johannes !Gawaxab, during the Cirrus Conference held on Wednesday at Swakopmund, expressed growing concerns over annual inflation impacting the economy of the country.

Acknowledging the impact of the inflationary pressures on the populace, !Gawaxab stressed the need for robust policy-making to mitigate uncertainties and anchor inflation expectations.

Despite the challenges posed by the COVID-19 pandemic, he said Namibia’s financial system has demonstrated resilience, remaining stable and sound.

He added that the banking sector has sustained solid profitability and robust capitalisation. Adding that the Namibian economy is projected to experience a modest slowdown in 2024 before rebounding in 2025, driven primarily by the Agriculture and Mining sectors.

“The unprecedented challenges and untapped opportunities we face in enhancing the well-being of Namibians today demands a novel approach, devoid of a pre-existing playbook. Our task is to craft a new strategy, with clarity in our objectives and transparency in our communication.

Our forward momentum necessitates a bold departure from conventional thinking to embrace innovative solutions for the benefit of our businesses and nation,” said !Gawaxab.

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