Namibians are expected to face higher food and housing costs in the coming months as rising fuel and distribution costs filter through to consumer prices, while municipal tariff increases add pressure to household expenses.
IJG Securities expects food and consumer goods prices to increase more rapidly, while housing and utility inflation is forecast to strengthen gradually. The firm expects headline inflation to remain between 4.5% and 5.5% over the coming months.
“We expect headline inflation to remain in the 4.5 to 5.5% range over the coming months, with changes in fuel prices staying the main swing factor. Housing & Utilities inflation is likely to firm gradually as municipal tariff hikes filter through the base, providing some delayed inflation pressure, while food and consumer goods should increase more rapidly,” IJG said.
The outlook follows an acceleration in Namibia’s annual inflation rate to 5.0% in August from 4.4% in July, largely driven by higher transport costs following fuel price increases.
Food and non-alcoholic beverage inflation stood at 4.0% in August, but IJG expects food price growth to accelerate as higher transport costs feed into distribution expenses.
“The 4.0% annual increase in food prices is likely to increase as food distribution costs increase,” the firm said.
Meat prices increased by 3.8% year on year in August, while fish prices rose by 3.7% and coffee, tea and cocoa by 3.5%.
Housing and utilities inflation stood at 4.3% during the month, supported by increases in electricity, fuel, maintenance and rental costs.
Further pressure is expected as municipal tariff increases take effect. Housing and utilities account for 28.4% of the consumer basket, making it the largest component of household expenditure measured by the inflation index.
IJG said the rise in headline inflation to 5.0% does not yet reflect broad-based price pressures, with transport responsible for a significant portion of the increase.
“Again, the change in inflation to 5.0% is largely due to the fuel price increase rather than a broad-based inflation problem, as transport alone accounted for 2.0 of the 5.0 percentage points, with the geopolitical tension underlying this well known,” IJG said.
Transport inflation climbed to 13.2% in August, with petrol and diesel prices rising by 25.1%, while public transport services also recorded stronger price growth.
Despite the increase in headline inflation, underlying price pressures remained more contained, with core inflation, which excludes food and fuel, standing at 3.8%.
“Core inflation at 3.8% suggests the underlying trend remains more comfortably contained for now,” IJG said.
The firm identified fuel prices as the main risk to Namibia’s inflation outlook, with higher transport costs beginning to feed through to food and other consumer goods.
