First National Bank (FNB) has revised its 2026 inflation forecast down to 3.7% from an earlier projection of 4.2%, citing lower fuel prices and softer global oil price pressures that are expected to provide some relief in the months ahead.
According to FNB’s latest Consumer Price Index (CPI) Review, inflation is likely to ease modestly following the fuel price reductions implemented in July, which lowered petrol prices by N$1.00 per litre and both diesel grades by N$4.00 per litre.
However, the bank cautioned that inflation risks remain tilted to the upside. Global oil prices remain vulnerable to renewed geopolitical tensions, while administered costs, particularly housing and utilities, are expected to remain elevated.
“Looking ahead, inflation is likely to ease modestly in the coming months, supported by the fuel price reductions implemented in July and softer external oil price pressures. However, the outlook remains tilted slightly to the upside. Global oil prices remain vulnerable to renewed geopolitical tensions, while administered service costs, particularly housing and utilities, are likely to remain sticky. As a result, although near-term price pressures should ease, inflation risks have not fully faded. On balance, we now forecast inflation to average 3.7% in 2026, down from 4.2% previously,” the report said.
The revised outlook follows an increase in annual inflation to 4.4% in June 2026 from 4.1% in May, driven mainly by higher transport costs and renewed price pressures in selected food categories.
Transport inflation remained the largest contributor to price growth, rising to 12.9% year-on-year in June from 11.5% in May.
Public transport services and the cost of operating private vehicles were the main drivers, with fuel prices remaining elevated despite being unchanged during the month.
FNB said food and non-alcoholic beverage inflation also accelerated to 2.5% in June from 2.0% in May, reflecting higher prices for products including fish, oils and fats, bread and cereals, fruit, sugar and confectionery.
Meanwhile, core inflation, which excludes more volatile price components, increased to 3.3% in June from 3.1% in May, indicating persistent underlying inflationary pressures.
“Headline inflation rose to 4.4% year-on-year (y/y) in June 2026, from 4.1% y/y in May 2026. The increase was mainly driven by elevated transport costs, while renewed price pressures in selected food categories also contributed to the upward movement. Core inflation also increased to 3.3% y/y in June, from 3.1% y/y in May,” the report said.
