‘Protect People, Not Prices’: Economist Urges Targeted Relief as Inflation Forecasts Diverge

Simonis Storm economist, Almandro Jansen is calling for targeted fuel relief, social grant top-ups and electricity support as Standard Bank projects 5.2% inflation in 2027, against the government’s 3.9% forecast.

“Namibia should prioritise protecting vulnerable households rather than attempting to suppress prices through broad subsidies,” Almandro advised.

Furthermore, he warned that rising fuel, food and electricity costs could intensify pressure on household budgets in 2027.

Jansen argues that targeted assistance would provide more sustainable relief than broad, open-ended subsidies at a time when government finances remain constrained and inflationary risks continue to build.

His recommendation follows Standard Bank`s projection of average inflation of approximately 5.2% in 2027, while the government’s mid-term budget puts the figure at 3.9%. The 1.3-percentage-point difference highlights the uncertainty surrounding Namibia’s inflation outlook.

According to Jansen, the difference largely reflects the timing of the forecasts and the assumptions underpinning them.

He said the lower projection was consistent with the Bank of Namibia (BON)`s August outlook, which preceded the month of September’s headline inflation rate of 5.4%, additional oil-price pressures and heightened risks associated with foot-and-mouth disease.

“We believe these pressures will persist and reinforce each other, which is why our view is closer to the higher forecast,” Jansen said, adding that he expects official forecasts to be revised upwards.

Jansen estimates that inflation could reach approximately 6.2% around the turn of the year, partly as fuel-price increases feed through to the wider economy.

He said that he expects fuel-related inflationary effects to ease from around April 2027, but warns that food prices could become a more significant driver as higher transport costs, imported food prices and weather-related supply risks take hold.

The difference between the two forecasts is significant for consumers. In simple terms, a basket currently costing N$1,000, inflation of 3.9% would increase its cost to N$1,039, while inflation of 5.2% would raise it to N$1,052.

These figures illustrate the difference between the projections rather than predicting the actual cost of every household’s basket. Neither forecast is guaranteed, and the outcome will depend on how fuel prices, food supply, electricity costs and domestic demand evolve.

Jansen said government has limited room to introduce broad subsidies that remain in place indefinitely.

He estimates that the budget deficit could reach between 5.6% and 5.9% of GDP in the current financial year, compared with Treasury’s 5.5% projection. For the following financial year, Simonis Storm estimates a deficit of between 5.0% and 5.3%, against the government’s 4.8% projection.

He also projects public debt at approximately 68.7% of GDP by March 2027.

Against this background, Jansen said policy should focus on supporting people who are most exposed to rising costs rather than subsidising prices for everyone.

“Our guiding principle is to protect people, not prices,” he said.

He estimated that broad fuel-price relief cost government approximately N$1.3 billion over two months this year. In his assessment, such measures can disproportionately benefit vehicle owners, while lower-income households that rely on public transport may receive less direct assistance.

Instead, he recommends time-bound fuel-price smoothing aimed at public transport costs, temporary top-ups through existing social grant systems and social electricity tariffs to protect poorer households.

He also called for faster investment in domestic renewable electricity generation to reduce exposure to supply constraints and potentially expensive imports.

Jansen warned that workers whose salaries remain unchanged would lose purchasing power if inflation continues rising.

If inflation averages 5.2% in 2027, household income would need to increase by approximately the same rate to preserve purchasing power, assuming spending patterns remain unchanged.

For a worker earning N$10,000 per month with no salary increase, Jansen estimates a loss of close to N$490 per month in purchasing power, equivalent to almost N$5,900 annually.

Low-income households could face greater pressure because food, transport and energy account for a larger share of their spending.

Businesses are also exposed. Higher fuel and electricity costs can raise production, distribution and operating expenses, prompting companies to increase prices, cut costs, freeze recruitment or delay investment.

Jansen warned that these pressures could further weaken job creation, particularly for young people, as Namibia faces a subdued economic outlook.

Jansen said monetary policy also presents a difficult choice. At the time of his assessment, Simonis Storm assigned a 70% probability to a 25-basis-point increase in the repo rate to 7% at that week’s monetary policy meeting.

Although higher interest rates can help contain inflationary pressures and support the currency peg, they also increase borrowing costs for households and businesses.

He therefore argued that fiscal support should be carefully targeted, rather than introduced in ways that could worsen public finances.

For consumers, the coming months will be important. Jansen recommends monitoring monthly fuel-price announcements, the exchange rate, food and core inflation data, rainfall conditions and electricity tariff decisions.

The difference between Standard Bank’s 5.2% projection and the government’s 3.9% estimate remains unresolved. Actual inflation data will ultimately determine which forecast proves more accurate.

Jansen has urged policymakers to direct assistance towards those who need it most rather than attempting to hold down prices across the entire economy, as household budgets are under pressure and public finances deeply constrained.