Inflation peak of 6.7% expected in early 2027

**Staff Writer **

The inflation rate is expected to peak at approximately 6.7% in February and March 2027 before easing towards 5% in April, as higher global energy prices continue to push up domestic transport, food and household costs.

According to a macroeconomic insights report by Simonis Storm Research, the inflation outlook remains challenging despite signs that underlying price pressures are more contained.

The projections come after annual inflation 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 report attributes the acceleration largely 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 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. For commercial operators consuming 10 000 litres of diesel monthly, the November fuel price increase added about N$30000 to their monthly fuel bill.

Higher fuel costs have also contributed to increases in 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%.

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%. Tomato prices recorded a sharper increase of 21.1%.

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.

Inflationary pressures varied across the country. Khomasrecorded the highest annual inflation rate at 6.2%, followed by the southern and coastal regions at 6.1%. The northern region recorded the lowest rate at 4.6%.

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 inflation outlook presents a challenge for the Bank of Namibia, which raised its repo rate to 7.00% in October.

Simonis Storm expects the central bank to maintain the rate at its December 8, 2026 monetary policy meeting.

However, the research house warns that 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, suggesting that households and businesses could face an extended period of elevated borrowing costs.

The timing and extent of inflation relief will depend largely on developments in international energy markets and the extent to which higher fuel costs continue feeding into domestic prices.