Low inflation expected throughout 2024
Price monster expected to be subdued
The inflation rate for 2024 is expected to be low, particularly during the first half of the year, analysts say.
The inflation rate is expected to remain subdued, particularly over the first half of the year, IJG Securities said in its analysis following the release of the inflation figures by the Namibia Statistics Agency (NSA) last week.“With the current repo and prime rates of 7.75% and 11.5%, respectively, together with the assumption that rates will remain flat in the first half of 2024, inflation is likely to remain on a downward trajectory in Namibia over the short term,” IJG said.
IJG said it expected inflation to not go over 6%.
However, given the global risk mentioned, supply-side pressures may offset weak demand. IJG’s inflation model is currently forecasting the Namibia Consumer Price Index rate to end in 2024 between 2.3% year-on-year (y-o-y) and 5.4% y-o-y for 2024.
Energy, food
Simonis Storm, in its analysis, said inflation would be on a downward trajectory for 2024.
“We maintain a vigilant outlook on the inflationary trends in Namibia. Given the observed data and current economic indicators, we project that inflation rates will continue to show a downward trajectory in the forthcoming year. For the fiscal year 2024, we are forecasting an average inflation rate of approximately 4.9%,” Simonis Storm said.
The easing of inflation would be supported by lower fuel prices, Simonis Storm noted.
“This forecast is underpinned by our expectation of persistently lower petrol and food prices, coupled with a stable rand, especially in the first quarter of 2024. These factors are anticipated to be key drivers in moderating headline inflation in Namibia,” Simonis Storm said.
“Furthermore, we expect that global economic trends, particularly in the energy and food sectors, will continue to exert significant influence on local inflation dynamics. It is crucial to note that our projections are subject to potential shifts in global economic conditions, policy changes and unforeseen events that could impact commodity prices and exchange rates,” it added.
Expectations
PSG, too, said its expectation was that inflation would remain low, largely driven by low fuel prices.
“We forecast inflation to slow to an average of 4.9% in 2024 thanks to lower global food and fuel prices and weaker domestic demand. We now project that the benchmark Brent crude spot price will average US$75.8 per barrel in 2024 – a decrease of 7.9% compared with 2023. That said, the risks to the inflation outlook are skewed to the upside due to the possible escalation of the Israel-Hamas war and the Houthi attacks in the Red Sea, as well as uneven rainfall in the southern Africa region,” PSG said.