Inflation outlook positive, Simonis Storm says

Simonis Storm (SS) says it expects inflation to ease in October, largely because of a reduction in the fuel price announced earlier this month.

The ministry of mines announced a reduction in both the prices of diesel and petrol by N$1.

“Looking ahead, Namibia's inflation is expected to continue easing, supported primarily by the ministry of mines’ recent decision to reduce fuel prices for October 2024,” Simonis Storm said in its inflation report.

“Petrol prices have been cut by N$1 per litre, bringing the price down to N$20.25 per litre, while diesel 50 ppm and diesel 10 ppm now cost N$19.72 and N$19.82 per litre, respectively,” it added.

“This reduction should alleviate inflationary pressures, especially in the transport sector, which has been a key driver of inflation over the past few months. However, this positive impact may be tempered by additional developments in the fuel market."

Food prices

Despite the overall favourable outlook for inflation, certain risks remain on the horizon. Food prices, for instance, have risen for two consecutive months, which could limit the inflationary relief expected from lower fuel prices.

“Although food inflation remains below last year's levels, any sustained upward pressure in this category could offset some of the gains from the fuel price reductions,” the analysis stated.

Simonis Storm noted that inflation could hover in the range of 4.6% to 4.7% for 2024.

“Given these evolving dynamics, we may need to revisit our initial forecast of 4.9% average inflation for 2024. With global oil prices softening and domestic fuel price cuts in place, there is potential for inflation to trend slightly lower, possibly in the range of 4.6% to 4.7%.”