Namibia inflation lowest since 2020, but oil risks looming
Namibia recorded an annual inflation rate of 2.4% in February – its lowest since December 2020.
This was primarily driven by low food inflation, which continues to cool considerably and has now reached its lowest rate since March 2011.
Following February’s fuel price cuts of 100c/litre for petrol and 50c/litre for diesel, the petrol/diesel Consumer Price Index item entered deflation, posting -5.6% y/y.
As fuel prices for March were unchanged, the item is expected to post deflation of -7.6% y/y for March’s print.
Looking ahead to April, however, if Namibian fuel prices were to increase by 200c/litre, the item would record an annual inflation rate of around 5%, translating into a contribution of around 0.5 percentage points to headline inflation.
Although oil prices recorded their largest percentage increase on record earlier this week, rising to around US$110/ per barrel before easing to just under US$100/ per barrel, Brent crude spot prices in ZAR/South African rands per barrel terms currently sit at quarter two of 2024’s levels thanks to a stronger rand.
Compared to quarter two of 2022 peak, current prices are still around 10% to 13% lower.
– Tannan Groenewald is the head of data and analytics at Cirrus Capital.
