CHAMWE KAIRA
FNB Namibia has projected that inflation will rise to 3.6% this month and reach 4% in December with a 12-month average of 4% for the year.
“We anticipate inflation to tick up in January 2025 due to seasonal adjustments made by the Namibia Statistics Agency in key sub-sectors such as rental inflation. We also expect food inflation to remain stubborn, despite more favourable weather conditions recently, until supply increases during the upcoming harvest,” FNB said.
The firm continues to believe that the risks to inflation are tilted to the upside.
However, FNB expects inflation to remain below 4.0% for the majority of 2025 in the absence of a significant rise in global oil prices.
Core inflation remained relatively sticky, at 3.8% in December 2024 compared to 3.9% in the previous month, indicating persistent—albeit marginally lower—inflationary pressures outside of the food and energy sectors.
On an annual basis, inflation decreased from 5.3% year on year in December 2023 to 3.4% year on year in December 2024, slightly above our expectation of 3.2% year on year.
Higher inflation in the housing, water, and utilities sectors offset the annual decreases seen in food, alcohol, and transport prices.
Specifically, housing, water, and utilities inflation increased from 3.4% year on year in December 2023 to 4.4% year on year in December 2024, primarily due to higher rental payments (+3.0%), repair costs (+2.5%), and water costs (+1.2%).
“Meanwhile, electricity, gas, and other fuels remained 8.1% lower than in the same period last year, in line with the government’s electricity subsidy for the 2024/25 financial year, partially mitigating the higher rental, repair, and water costs. Similarly, the hotels and restaurants category saw a modest year-on-year increase of 0.2 ppt to 6.7% in December 2024, mainly driven by higher catering costs in line with stubborn food prices, although lower accommodation prices offset some of the rise in catering prices during the period under review,” FNB said.
