Namibia’s annual inflation rate is projected to reach 6.7% in February and March 2027 before easing to 5.0% by May, as rising fuel prices continue to drive consumer costs, according to Simonis Storm.
The research firm expects inflation to accelerate to 6.4% in November 2026 following the latest fuel price increases, before remaining between 6.5% and 6.7% through March next year.
In its latest inflation outlook, Simonis Storm said inflation was expected to moderate from April as the sharp monthly price increases recorded in April and May 2026, of 1.1% and 1.2% respectively, fall out of the annual comparison.
Under its baseline forecast, inflation is projected to decline to 6.0% in April and 5.0% in May and June 2027.
The forecast follows an increase in Namibia’s annual inflation rate to 5.6% in October, up from 5.4% in September and 3.6% in October 2025.
The October reading was the highest since November 2023 and marked the seventh consecutive monthly increase in annual inflation since the rate fell to 2.1% in March 2026.
“Prices rose by 0.7% month-on-month in October, compared with 0.4% in September and 0.5% in October 2025. Transport contributed 2.5 percentage points to the annual rate, while food and housing contributed approximately one percentage point each. Other divisions collectively accounted for 0.9 percentage points,” the firm said.
Simonis Storm attributed much of the increase to higher fuel prices rather than broad-based consumer demand.
Petrol and diesel, which account for 5.0% of the consumer price basket, recorded a combined price increase of 34.1%, contributing approximately 1.7 percentage points to headline inflation.
The firm estimated that inflation would have been approximately 4.1% without the impact of petrol and diesel prices.
Core inflation, which excludes food and energy items accounting for 24.3% of the consumer basket, declined to 3.7% in October from 4.0% in September.
Core goods inflation slowed to 2.7%, while core services inflation stood at 4.5%.
Housing inflation remained unchanged at 3.9%, with rental inflation easing to 3.6%. Electricity charges increased by 1.7%, while water and refuse collection charges rose by 6.1%, reflecting municipal tariff adjustments.
Regional inflation figures showed that Khomas, classified as Zone 2, recorded the highest annual rate at 6.2%.
Transport inflation in the region reached 18.3%, while furnishings and health inflation stood at 9.5% and 6.7%, respectively.
The southern and coastal regions, classified as Zone 3, recorded inflation of 6.1%, up from 5.8%, while the northern region, Zone 1, registered the lowest rate at 4.6%.
Simonis Storm’s inflation outlook is higher than the Bank of Namibia’s projections, reflecting different assumptions about the direction of fuel prices.
The research firm expects pump prices to remain close to current levels during the first quarter of 2027, while the central bank’s forecast assumes fuel prices will ease.
Simonis Storm projects average annual inflation of 4.4% in 2026 and 5.4% in 2027, compared with the Bank of Namibia’s forecasts of 4.2% and 4.0%, respectively.
Despite the differences, both institutions expect inflation to moderate during 2027.
On monetary policy, Simonis Storm expects the Bank of Namibia to maintain its repo rate at 7.00% during its next monetary policy announcement on 8 December, before increasing it to 7.25% in the first quarter of 2027.
The forecast follows the central bank’s decision to raise the repo rate by 25 basis points to 7.00% on 28 October, leaving Namibia’s benchmark rate 25 basis points below South Africa’s 7.25%.
Simonis Storm said Namibia’s real interest rate had narrowed to approximately 1.4%, compared with about 2.75% in South Africa, reducing the scope for an early interest rate cut.
However, the firm said a potential agreement between the United States and Iran, combined with core inflation falling below 3.5%, could delay the anticipated rate increase.
The research firm identified a further escalation in the Iran conflict and disruptions to shipping through the Strait of Hormuz as major upside risks to its inflation forecast.
Under such a scenario, inflation could peak at approximately 7.8%, driven largely by higher international oil prices and increased transport costs.
A severe El Niño event and poor agricultural harvests could add between 0.5 and 1.0 percentage point to inflation during the second half of 2027, while further rand depreciation could increase the cost of imported goods and fuel.
Conversely, Simonis Storm said a US-Iran agreement that keeps Brent crude prices below US$80 per barrel could limit the inflation peak to approximately 6.4%.
Restraint in administered prices, including utility tariffs and transport fares, could also help contain inflationary pressure.
The firm said risks to its inflation outlook had become more balanced, although they remained slightly tilted towards higher inflation.
