As Namibia navigates a shifting economic landscape, recent data reveals that inflationary pressures stem not from broad-based price surges but from targeted sectors grappling with supply constraints, energy volatility, and regulatory shifts. While the annual inflation rate eased to 3.6% in April 2025, down from 4.8% the previous year, underlying causes point to structural challenges affecting households and businesses nationwide.
The largest contributor to inflation remains the Food and Non-Alcoholic Beverages category, which accounts for 16.5% of the consumer basket. Prices in this sector rose by 5.6% annually, driven by stark increases in staples such as fruits (16.9%), meat (7.1%), and oils and fats (6.7%). Cooking oil prices, for instance, swung from a 4.1% deflation in April 2024 to an 8.6% surge in 2025, reflecting supply chain bottlenecks and potential shortages of imported raw materials. Similarly, fruit prices skyrocketed due to poor harvests and logistical delays, with watermelons and citrus fruits seeing jumps of 34.8% and 30.9%, respectively. These spikes underscore vulnerabilities in agricultural production and distribution networks, exacerbated by climatic uncertainties and reliance on imports for key commodities like sunflower oil.
The Housing, Water, Electricity, Gas, and Other Fuels category, which holds the highest weight in Namibia’s inflation basket at 28.4%, saw prices rise by 4.1% annually. Electricity and fuel costs were significant drivers, influenced by global energy market fluctuations and domestic infrastructure challenges. Monthly increases in this category outpaced the national average, suggesting persistent pressure from rising utility tariffs or reduced subsidies. Diesel and petrol prices remained elevated across all regions, with Zone 3 recording the highest annual inflation in this sector at 3.6%, up from 0.7% in 2024. Such trends highlight the dual impact of international oil price volatility and localized energy distribution inefficiencies.
Alcoholic Beverages and Tobacco, contributing 0.7 percentage points to inflation, saw prices rise by 4.9% annually. While lower than the previous year’s 7.3%, this uptick likely reflects ongoing tax adjustments or regulatory measures aimed at curbing consumption. Beer and whisky prices moderated but remained elevated, while tobacco products faced sustained inflationary pressure, particularly in rural zones like Zone 3, where prices for these items rose by 7.7%. These increases align with broader fiscal strategies to boost revenue through sin taxes, indirectly affecting household budgets.
A notable divergence emerged between goods and services inflation, with services rising by 4.2% compared to goods at 3.2%. Sectors such as education, healthcare, and recreation—often labor-intensive and less exposed to global commodity swings—drove this trend. For instance, Hotels, Cafés, and Restaurants recorded the highest annual inflation at 6.3%, likely tied to rising operational costs, wage increases, or post-pandemic demand recovery. Similarly, Zone 2 (Khomas) saw recreation and culture costs slow from 11.1% to 3.7%, suggesting uneven recovery in urban service economies.
Inflation patterns varied starkly across Namibia’s three zones, underscoring regional economic disparities. Zone 3 (//Kharas, Erongo, Hardap, Omaheke) recorded the highest annual inflation at 4.1%, driven by sharp rises in food (7.6%) and housing costs (3.6%). This contrasts with Zone 2 (Khomas), where inflation eased to 3.2%, aided by slower price growth in transport and recreation. Such disparities point to unequal access to infrastructure, market integration, and energy solutions, with rural and semi-urban areas bearing the brunt of supply chain inefficiencies and limited alternatives to grid electricity.
Core inflation, which excludes volatile food and energy prices, stood at 4.0%—higher than the headline rate—indicating persistent inflationary pressures in non-cyclical sectors. Services, education, and healthcare contributed significantly, suggesting that wage growth, administrative cost escalations, or monopolistic pricing in critical sectors may be at play. This trend raises concerns about long-term economic stability, as core inflation often reflects entrenched structural issues less responsive to short-term monetary policy.
The causes of Namibia’s inflation reveal a complex interplay of domestic and external factors. Supply chain resilience, energy diversification, and equitable regional development emerge as critical priorities. Investments in agricultural productivity, renewable energy infrastructure, and logistics networks could mitigate food and fuel volatility. Meanwhile, targeted subsidies or tax reforms may alleviate burdens on low-income households disproportionately affected by rising utility and commodity costs.
As Namibia strives toward its Vision 2030 goals, addressing these inflationary drivers will be pivotal to ensuring sustainable growth. Policymakers face the dual challenge of stabilizing prices while fostering an environment conducive to job creation and industrial expansion—a balancing act that demands precision, innovation, and collaboration across public and private sectors.