Windhoek: Namibia’s annual inflation rate eased to 3.5 per cent in July, down from 3.7 per cent in June and 4.6 per cent in July last year.

According to Namibia Press Agency, this was indicated in a report issued to Nampa on Tuesday by First National Bank of Namibia (FNB).

The slowdown was mainly due to continued deflation in transport costs, along with smaller increases in housing, utilities, furnishings, and prices in hotels and restaurants. These offset sustained upward pressure from food, alcoholic beverages, and tobacco. Transport inflation remained negative at -12 per cent year-on-year, compared with -2.2 per cent in June and 6.7 per cent in July 2024. This was driven by lower fuel prices and unchanged pump rates since April, when petrol and diesel were reduced. The Ministry of Mines and Energy reported over-recoveries for both diesel and petrol, which helped maintain pump prices.

Housing and utilities inflation slowed to 3.6 per cent from 4.1 per cent a year ago. The moderation was supported by improved rainfall, which boosted hydropower generation at Ruacana to above-average levels, and by continued investment in regional energy infrastructure. Food and non-alcoholic beverages inflation rose to 6.1 per cent from 4.8 per cent a year earlier. Meat prices increased by 10.3 per cent, fruit by 15.4 per cent, and vegetables by 9.7 per cent, with notable gains in beef, lamb, onions, cucumbers, and spinach.

FNB economist Helena Mboti stated that food remains the largest single contributor to headline inflation. “The broader food basket remains the largest contributor to headline inflation and the most vulnerable to climatic shocks and supply-chain disruptions,” she said. Core inflation, which excludes food and transport, fell slightly to 3.9 per cent from 4.2 per cent in June.

Mboti noted that price pressures in rentals and regulated services “remain sticky despite the overall moderation in headline inflation.” FNB has revised its inflation forecast for December to 3.7 per cent, down from 4.5 per cent earlier. The bank attributed this to prolonged transport deflation, weak domestic consumption, and favourable currency movements due to a softer US dollar.

Mboti cautioned that the downward impact from transport is expected to diminish as base effects change. “Once transport inflation turns positive, likely in 2026 rather than late 2025, headline inflation could rise again even if other categories remain stable,” she said.