CHAMWE KAIRA
Namibia’s inflation trends are aligning with global patterns, where price pressures are easing in major economies, according to Simonis Storm Securities.
In the United States, inflation stood at 2.6%, while the Euro Area recorded 2.3%, both benefiting from stable energy prices and slower economic activity.
In South Africa, inflation moderated to 2.8% yearoveryear, driven by lower transport costs and a slowdown in food price increases.
Simonis noted that Namibia’s inflationary dynamics differ from its regional peers, particularly due to structural challenges in housing and utilities, which keep core inflation elevated.
The report noted that the reintroduction of US tariffs under a potential Trump administration could increase import costs, particularly for goods reliant on global supply chains.
Rising freight and transportation costs due to trade disruptions may further affect the prices of imported essentials such as food, electronics, and fuel.
The Bank of Namibia (BoN) has maintained a measured approach to monetary policy. In 2024, the BoN implemented three consecutive 25 basis point rate cuts, bringing the repo rate to 7%.
“This easing cycle aimed to support consumer spending and investment, providing a foundation for economic recovery amid moderating inflation. Looking ahead, we anticipate an additional 25 basis point rate cut in February 2025, bringing the repo rate down to 6.75%,” the report said.
Simonis said it expects a pause in the easing cycle during the first half of 2025, allowing policymakers to assess the impact of previous rate cuts on inflation and economic activity.
“Over the course of 2025, we project further rate cuts totalling 75 basis points, bringing the repo rate to 6.25% by year-end, in line with our view that inflation will remain contained within the central bank’s comfort range,” the report said.
In terms of 2025, Simonis said it anticipates headline inflation to remain stable at 3.2% year on year in February 2025, with monthly inflation expected at 1.1%.
The report said while price pressures have moderated across key sectors, specific categories continue to exert upward pressure, with seasonal demand for meat, vegetables, and beverages likely to drive a 0.8% month-on-month increase in food prices.
Despite improved weather conditions supporting agricultural output, global food price volatility and supply chain adjustments remain key risks, keeping year-on-year food inflation resilient.
In terms of transport costs, the report said a notable fuel price hike in February is expected to push transport inflation up by 1% month on month, impacting both personal transport expenses and logistics costs.
Simonis said elevated energy consumption following the festive season, combined with structural inefficiencies in housing supply, could push utility costs marginally higher.
