Namibia's Inflation Rate Expected to Peak at 6.7% in Early 2027

According to a macroeconomic insights report by Simonis Storm Research, Namibia's inflation rate is expected to peak at approximately 6.7% in February and March 2027. This projection comes as higher global energy prices continue to push up domestic transport, food, and household costs. The report notes that the inflation outlook remains challenging despite signs that underlying price pressures are more contained.

The inflation rate climbed to 5.6% in October 2026, its highest level since November 2023 and the seventh consecutive monthly increase since reaching a low of 2.1% in March. The acceleration is largely attributed to a global energy price shock, which has filtered through the domestic economy, increasing transport and logistics costs. Transport accounted for 44% of headline inflation in October, reflecting the impact of higher fuel prices on the cost of moving people and goods.

Petrol and diesel prices in Namibia increased by 34.1% over the past year. Following successive increases in October and November, petrol reached N$28.58 per litre at Walvis Bay, while diesel 50ppm rose to N$30.86. A standard 50-litre petrol tank now costs motorists approximately N$450 more to fill than it did in March. This sharp increase in fuel prices has contributed to higher costs for households and businesses.

The increase in fuel costs has also led to higher passenger and freight transport charges. Airfares rose by 22.9%, while rail and taxi fares increased by 15.7% and 15.4%, respectively. Goods transport and freight haulage costs rose by 9.6%. Additionally, food inflation increased to 4.8% in October, driven by higher prices for fresh produce and meat. Fresh fruit prices increased by 13.5%, while vegetable prices rose by 10.5%.

Beef prices increased by 8.5% in a single month, with regional foot-and-mouth disease outbreaks and disruptions to livestock trade contributing to the pressure. Households also faced higher municipal charges, with water, sewerage, and refuse costs increasing by 6.1% following tariff adjustments. The inflationary pressures varied across the country, with Khomas recording the highest annual inflation rate at 6.2%.

Despite rising headline inflation, core inflation, which excludes volatile food and energy prices, eased to 3.7%. Services and rental inflation stood at 3.6%, indicating that the current inflationary pressures are largely being driven by supply-side costs rather than strong domestic consumer demand. The Bank of Namibia raised its repo rate to 7.00% in October to address the inflationary pressures.

Simonis Storm Research expects the central bank to maintain the repo rate at its December 8, 2026 monetary policy meeting. However, further increases remain possible if global oil prices continue exerting pressure on domestic inflation. The repo rate could rise to 7.25% in the first quarter of 2027 if energy-related inflationary pressures persist. Interest rate cuts are not expected before the second half of 2027.

Key points

• The inflation rate is expected to peak at 6.7% in February and March 2027.
• The increase in fuel costs has contributed to higher transport charges and inflationary pressures.
• The repo rate could rise to 7.25% in the first quarter of 2027 if energy-related inflationary pressures persist.