First National Bank of Namibia (FNB) has warned that rising transport, housing and food costs, coupled with global geopolitical tensions and the increasing likelihood of El Niño conditions, could push domestic inflation higher despite the bank forecasting an average rate of 4.0% for 2026.
In its Economic Review, FNB said the volatile global environment poses upside risks to Namibia’s inflation outlook through higher fuel and commodity prices, while El Niño could weaken regional agricultural production and place further pressure on food prices.
“We expect inflation to remain elevated and average 4.0% y/y in 2026, driven by persistent transport, housing, and food price pressures,” FNB said.
“Moreover, a volatile global backdrop continues to pose inflationary risks through higher fuel and commodity prices, while the increasing likelihood of El Niño conditions could weaken regional agricultural production and place further upward pressure on food prices.”
The bank said risks to its inflation forecast remain tilted to the upside, particularly if energy prices remain elevated or food and housing costs increase more sharply than expected.
The outlook comes after Namibia’s annual headline inflation accelerated to 5.0% in August from 4.4% in July, with transport, housing and food accounting for about 75% of the overall inflation rate.
Transport remained the biggest source of inflationary pressure, with annual inflation in the category accelerating to 13.2% in August from 9.3% in July and contributing 2.0 percentage points to headline inflation.
Housing, water, electricity, gas and other fuels recorded annual inflation of 4.3% and contributed 1.0 percentage point, while food inflation stood at 4.0%, contributing 0.8 percentage points.
FNB said persistent transport costs are expected to remain a major source of inflationary pressure alongside housing and food prices.
The bank also flagged global geopolitical tensions as a risk, with ongoing conflict in the Middle East contributing to uncertainty and volatility in international energy and commodity markets. Higher international energy prices could feed through to domestic fuel and transport costs.
On monetary policy, FNB expects the repo rate to remain at 6.75% in the near term, before reaching 7.0% by December 2026. Its forecast puts the average repo rate at 6.75% for the year.
The Bank of Namibia currently maintains the repo rate at 6.75%.
