Transport fuels inflation in June

Namibia's annual inflation remained steady at 4.6% in July, with the primary drivers being the transport, housing and utilities, and food and non-alcoholic beverages categories, Simonis Storm said following the release of the inflation figures for June.

The transport category saw a reduction in inflation due to lower fuel prices, while the housing category experienced an increase, primarily driven by higher rental costs. “Food inflation edged up slightly, though the price increases for key items were slower compared to the previous year. Meanwhile, inflation in the alcoholic beverages and tobacco category continued to decelerate for the third consecutive month,” the firm said.

Year-to-date, annual inflation is averaging 4.8%, which is slightly below our 2024 annual average projection of 4.9%.

“As we look ahead, while goods-driven inflation appears to be easing, there are emerging signs of rising services inflation, which will require close monitoring throughout the remainder of the year."

Continued inflationary pressure

The transport category, which holds the third-largest weight in Namibia's inflation basket, recorded inflation rate of 6.7% year-on-year (y/y) in July. This reflects a deceleration from the 8.3% y/y observed in June, yet remains significantly higher compared to the deflationary rate of -2.5% y/y in July 2023.

"The continued inflationary pressure in this category is primarily driven by the costs associated with operating personal transport equipment, particularly the prices of diesel and petrol," it said.

In July, the housing, water, electricity, gas and other fuels category, which holds the largest weight in Namibia's inflation basket, recorded an inflation rate of 4.1% year-on-year (y/y), marking its highest level since January. This increase was primarily driven by higher rental payments for dwellings.

“Conversely, inflation in electricity charges decelerated to 7.6% y/y, a slowdown attributed to the government's intervention, which cancelled the usual electricity rate hike that typically occurs in July,” Simonis Storm said.

The food and non-alcoholic beverages category saw an annual inflation rate of 4.8% y/y, up from 4.3% y/y in June 2024, but slower than the 10.5% y/y recorded in July 2023. Within this category, bread and cereals increased by 2.5% y/y, meat by 3.8% y/y, milk, cheese and eggs by 5.9% y/y, fish by 3.0% y/y, and vegetables by 4.6% y/y.