There are fears that Namibia’s annual inflation could reach a high of 7% this year, unless there are significant developments across the world to halt crude oil prices.
This was after the Bank of Namibia revised upwards the country’s annual inflation forecasts for 2022 to 6% from the initial estimate of 4.7% at a time when the US inflation climbed to 8.5% in March, highest rate since 1981.
“Although overall inflation remains within a reasonable range, its food and transport components are expected to remain elevated and continue to have a disproportionate effect on the low segment of the society, and therefore requires close monitoring,” BoN Governor Johannes !Gawaxab said.
PSG Namibia Research Analyst, Shelly Louw forecasts average inflation closer to 5.5% from the current forecast of 4.7%.
“As expected, there was another round of hefty upward adjustments to domestic fuel prices in April due to rising Brent oil price Consequently, fuel prices have risen by nearly N$3.5/litre since the start of the year Transport price inflation will likely remain near double digits throughout most of the year due to the abovementioned increase in fuel prices Additionally, the prices of wheat, maize and fertilisers have also surged in the wake of the Russian invasion, which will exert upward pressure on food price inflation,” she said.
Simonis Storm Economist Theo Klein is predicting inflation to surpass the initial forecast of 4.7% to a high of 7.1% in 2022.
“The ongoing war in Ukraine will likely keep food prices elevated for the foreseeable future. China consumes the most oil globally and demand will likely increase dramatically when their lockdowns are removed, potentially providing a second global oil price shock and filtering through to higher fuel prices in Namibia,” he said.
“Improved supply chain solutions and efficiency enhancing infrastructure between African countries will go a long way in lowering food insecurity in certain African states. In the absence of the above, we could expect significant food shortages and rising food prices in the near future in Namibia. This could further lead to social risks, which could be avoided by observing a meaningful economic recovery with job creation focused on the bottom of the income distribution.”
RMB Economist Africa Daniel Kavishe says he expects inflation to print above 6 % over the next twelve months.
“Inflation expectations are set to increase, given rising fuel, food and other import costs,” he said.
