Consumer prices in Namibia are expected to rise in the coming months as economists warn that recent fuel price hikes and global oil market disruptions could reverse the country’s recent inflation slowdown.
The warning comes after Namibia’s annual inflation rate slowed to 2.1% in March, down from 2.4% in February, offering temporary relief to households.
Economists, however, say that lower inflation may not last as rising fuel costs begin filtering through the broader economy.
Simonis Storm Securities Head of Investments Max Rix said March likely marked the lowest point in the current inflation cycle.
“The key point is that Namibia’s inflation cycle is now at a turning point. The latest CPI print still looks very benign, with headline inflation easing to 2.1% year-on-year in March, from 2.4% in February. However, we would be careful not to treat that number as a signal that inflation will continue moving lower. In our view, March is more likely to mark the trough in the current inflation cycle than the start of a new disinflation leg,” said Rix.
He said April’s fuel price increases are expected to push up transport, logistics, food distribution and production costs.
Petrol prices increased to N$22.08 per litre, while diesel rose to N$23.63 per litre for 50ppm and N$23.73 per litre for 10ppm.
Standard Bank Namibia Economist Helena Mboti said the recent slowdown in inflation was largely driven by transport deflation but warned that this trend is likely to reverse.
“While headline inflation has recently moderated, this is expected to reverse in the near term as higher fuel prices and related cost pressures begin to filter through, alongside rising risks to food and imported inflation,” she said.
Mboti said higher global oil prices, driven by geopolitical tensions in the Middle East, along with rising fertiliser and transport costs, are expected to increase inflation in the second quarter.
High Economic Intelligence Economist Lewis Komu said the latest fuel price adjustment has created fresh inflation risks.
He said higher oil prices, freight costs and insurance premiums linked to tensions around the Strait of Hormuz are adding pressure to Namibia’s inflation outlook.
“At the same time, the sharp April fuel price adjustment, driven by higher oil, freight and insurance costs linked to tensions around the Strait of Hormuz, has introduced renewed upside risk to inflation,” said Komu.
Komu said while inflation has remained relatively contained, worsening external cost pressures increase the likelihood that higher fuel prices will spill over into broader consumer goods and services.
