Staff Writer
Simonis Storm expects inflation between September and December to range from 5.5% to 6.8%, driven by September fuel and levy increases, Brent crude oil prices remaining near US$100 per barrel, administered transport fares and the impact of El Niño on food prices.
Food inflation rose to 4% in August, although monthly food inflation slowed to 0.1% from 1.1% in July. Fruit prices recorded the fastest annual increase in the food basket at 13.8%.
Simonis Storm expects food inflation to remain between 3.5% and 4.5% during the second half of 2026, with the risks skewed towards the upper end of the range.
Annual inflation increased to 5% in August. The firm said the increase was driven by sustained tensions in the Middle East, OPEC+ supply discipline and tight global inventories.
The August reading was the highest since February 2024 and represented a 0.6 percentage-point increase from July.
Transport inflation accelerated to 13.2% in August from 9.3% in July, while food inflation increased to 4.0% from 3.7%. Core inflation edged up to 3.8% from 3.7%.
Simonis Storm said fuel accounted for 40% of the overall inflation rate in August, up from 32% in July.
The firm also identified El Niño as a growing risk to food prices. It said the World Meteorological Organisation had assigned a near-100% probability that El Niño would persist through February 2027, with the phenomenon expected to strengthen towards year-end.
Simonis Storm said an increase in South African inflation could also affect Namibia through the Common Monetary Area. The South African Reserve Bank held its policy rate at 7% on 23 July.
The firm has identified an upside inflation scenario of between 4.7% and 5.1% for Namibia’s 2026 annual average if Brent crude oil remains above US$105 per barrel, El Niño strengthens further and the South African Reserve Bank raises interest rates.
It expects Namibia’s inflation rate to remain between 4.8% and 6.8% through the end of 2026, with international crude oil prices identified as the key variable to watch.
The increase came against a sharp rise in international oil prices. Brent crude reached about US$99.85 per barrel on 8 September, up 17% month-on-month and 50% year-on-year.
At current Brent prices, Simonis Storm said further pump-price relief in Namibia was unlikely for the remainder of 2026, with the focus shifting to the extent and frequency of further price increases before year-end.
The Bank of Namibia kept its repo rate at 6.75% on 12 August for a second consecutive meeting. The central bank maintained its 4.0% inflation forecast for 2026 while revising its 2027 forecast to 3.9%.
The bank also lowered its 2026 economic growth forecast to 2.1% from 2.6%, citing weakness in mining, manufacturing and power generation. According to Simonis Storm, inflation averaged 3.55% between January and August 2026.
