Namibia’s inflation rate fell to a four-year low in February, but economists warn this might only be the calm before the storm. Rising geopolitical tensions in the Middle East have sharply altered the global energy outlook, raising the risk that Namibia’s disinflation trend could soon reverse.
According to analysis from financial services firm Simonis Storm (SS), Namibia’s headline inflation slowed to 2.4% year-on-year in February 2026, down from 2.9% in January and 3.6% a year earlier. The reading marks the lowest inflation rate since December 2020 and reflects a sustained cooling in consumer price pressures since mid-2025.
However, the inflationary moderation has been driven largely by falling food and fuel prices rather than a broad-based easing of domestic demand. Core inflation, which eliminates volatile food and energy components, remained firmer at 3.2%, while services inflation held at 3.7%, indicating that underlying price pressures in the domestic economy remain relatively sticky.
“This divergence suggests that Namibia’s inflation floor is likely closer to 3.0% to 3.5% rather than the current 2.4% reading,” SS stated.
The firm noted that food prices have been the primary source of relief for households. Inflation in the food and non-alcoholic beverages category slowed sharply to 1.6% year-on-year, down from 5.9% a year earlier, one of the steepest food disinflation episodes Namibia has experienced since 2011. Improved regional harvests and lower global grain prices pushed several staple items into outright deflation, including maize meal and potatoes.
Transport costs have also helped suppress overall inflation. The transport category recorded –1.0% inflation, largely due to lower fuel prices. Petrol and diesel prices fell 5.6% year-on-year, providing a meaningful cushion for households and businesses. Late February saw a dramatic escalation in geopolitical tensions following US and Israeli strikes on Iran, which triggered the closure of the Strait of Hormuz, the vital shipping route that carries roughly 20% of global oil supply. The market reaction has been swift as Brent crude oil surged from about US$71 per barrel on 27 February to a peak of US$119.50 on 9 March, before easing to around US$91 to US$96 by mid-March. Analysts estimate that roughly US$18 per barrel of the current oil price reflects a geopolitical risk premium.
For Namibia, the transmission channels are immediate as the country imports all of its fuel, and higher global oil prices feed directly into domestic pump prices. Petrol and diesel currently retail at roughly N$20.07 to N$20.26 per litre, but Simonis Storm estimates prices could rise by around N$1.50 per litre if current oil levels persist.
A sustained rise in oil prices toward US$100 per barrel could add 1.0 to 1.5 percentage points to transport inflation and roughly 0.3 to 0.5 percentage points to headline inflation, according to SS.
Food inflation could also follow suit because Namibia imports 605 to 80% of its food, primarily from South Africa, meaning higher fuel costs quickly ripple through agricultural production, logistics, and retail prices.
Under a scenario where Brent averages US$95 to US$100 per barrel in the second quarter, Simonis Storm estimates Namibia’s inflation rate could climb from the current 2.4% to between 3.5% and 4.5% by mid-2026.
A more severe scenario, involving a prolonged Strait of Hormuz closure and further currency weakness, could push inflation close to 5% by the third quarter.
SS further pointed out that such an increase would be driven by external supply shocks rather than overheating domestic demand.
The firms emphasised that this limits the effectiveness of monetary policy. For policymakers at the Bank of Namibia, the challenge may therefore be to tolerate a temporary spike in inflation while guarding against second-round effects such as rising wages and service prices.