Inflation relief arrives in 2025
Cooling
Ogone Tlhage
Price pressures eased markedly in 2025, delivering one of the weakest inflation outcomes since the introduction of Namibia’s current national consumer price index (NCPI) basket in 2013, according to Cirrus Capital’s inflation review for 2025.
While headline inflation tracked broadly in line with 2024 for parts of the year, the underlying drivers of price developments differed substantially, signalling an important structural shift in the inflation environment.
Measured on a year-to-date basis, 2025 ranked 11th out of 13 years under the current CPI framework, indicating that prices rose at a significantly slower pace than in most post-2013 periods. Average annual inflation declined to 3.5%, down from 4.2% in 2024, and marked the lowest annual inflation rate since 2020, when inflation averaged 2.2%.
At a headline level, inflation trends in 2025 appeared deceptively similar to those of the previous year. However, a closer examination of basket-level movements reveals a stark contrast in inflation dynamics between the two periods.
In 2024, inflation was broad-based. Prices for nearly all goods and services rose steadily as the year progressed, with notable accelerations in the second half of the year. Key expenditure baskets, such as food, beverages, tobacco and housing, recorded persistent upward pressure, reflecting both global cost pass-throughs and domestic pricing behaviour. These increases were partially offset by several reductions in fuel prices during the year, which helped moderate overall CPI growth and limited the contribution of the transport basket, the Cirrus Capital report noted.
By contrast, 2025 displayed almost the opposite behaviour. Despite headline CPI progression appearing similar at times, many major baskets experienced their slowest price increases since the pandemic, with several recording outright price declines during parts of the year. Important household-related categories, including food and non-alcoholic beverages, furniture, household appliances and personal care items, saw significantly subdued price developments, offering tangible relief to consumers, according to Cirrus Capital.
Food and non-alcoholic beverages were the dominant contributors to inflation during early 2025. However, their influence gradually waned as annual food price inflation declined throughout the year. By October, housing and utilities overtook food as the primary inflation driver, following notable rent price increases captured during that month’s quarterly data collection, Cirrus Capital’s analysis found.
Alcohol and tobacco also reduced their contribution to headline inflation over the course of the year. This moderation was partly driven by actual price cuts in beer during mid-2025, combined with relatively slow price increases in spirits and tobacco products. The easing in this basket further reinforced the broader trend of weakening goods-related inflation.
Transport was not a major inflation contributor in 2025, as fuel prices remained largely stable throughout the year. Nevertheless, base effects linked to volatile fuel price movements in 2024 caused the transport basket’s contribution to headline inflation to shift direction twice during the year, underscoring the lingering influence of past price shocks even in a more stable pricing environment.
Taken together, these developments point to a significant change in the composition of inflation. While commodity-linked goods inflation cooled substantially, inflation pressures increasingly shifted toward domestically driven and typically more rigid components, particularly services. This shift is reflected in core inflation remaining above headline inflation in 2025, suggesting that underlying price pressures persist despite the overall slowdown.
The latter part of the year illustrated this tension clearly. Although many goods categories recorded deflation or price stability in the second half of 2025, particularly across all food baskets, housing and utilities experienced a sharp uptick. A quarterly rent price capture revealed a 4.8% annual increase, pushing housing and utilities inflation to 4.5% in December. This marked the basket’s highest annual inflation rate since December 2017, when it stood at 9.2%, and made it the fastest-rising category on a year-on-year basis by the end of 2025.
Miscellaneous goods and services followed a broadly similar trajectory to 2024, though with notable exceptions. The basket recorded periods of decline or stagnation due to decreases or the removal of certain bank fees, providing limited but meaningful relief in service-related costs such as banking and financial services.
Overall, 2025 was characterised by significantly slower price increases than the previous year, with inflation relief driven by actual price declines rather than offsetting effects from volatile components such as fuel. However, the late-year acceleration in housing-related costs highlights the uneven nature of the disinflation process.
Price pressures eased markedly in 2025, delivering one of the weakest inflation outcomes since the introduction of Namibia’s current national consumer price index (NCPI) basket in 2013, according to Cirrus Capital’s inflation review for 2025.
While headline inflation tracked broadly in line with 2024 for parts of the year, the underlying drivers of price developments differed substantially, signalling an important structural shift in the inflation environment.
Measured on a year-to-date basis, 2025 ranked 11th out of 13 years under the current CPI framework, indicating that prices rose at a significantly slower pace than in most post-2013 periods. Average annual inflation declined to 3.5%, down from 4.2% in 2024, and marked the lowest annual inflation rate since 2020, when inflation averaged 2.2%.
At a headline level, inflation trends in 2025 appeared deceptively similar to those of the previous year. However, a closer examination of basket-level movements reveals a stark contrast in inflation dynamics between the two periods.
In 2024, inflation was broad-based. Prices for nearly all goods and services rose steadily as the year progressed, with notable accelerations in the second half of the year. Key expenditure baskets, such as food, beverages, tobacco and housing, recorded persistent upward pressure, reflecting both global cost pass-throughs and domestic pricing behaviour. These increases were partially offset by several reductions in fuel prices during the year, which helped moderate overall CPI growth and limited the contribution of the transport basket, the Cirrus Capital report noted.
By contrast, 2025 displayed almost the opposite behaviour. Despite headline CPI progression appearing similar at times, many major baskets experienced their slowest price increases since the pandemic, with several recording outright price declines during parts of the year. Important household-related categories, including food and non-alcoholic beverages, furniture, household appliances and personal care items, saw significantly subdued price developments, offering tangible relief to consumers, according to Cirrus Capital.
Food and non-alcoholic beverages were the dominant contributors to inflation during early 2025. However, their influence gradually waned as annual food price inflation declined throughout the year. By October, housing and utilities overtook food as the primary inflation driver, following notable rent price increases captured during that month’s quarterly data collection, Cirrus Capital’s analysis found.
Alcohol and tobacco also reduced their contribution to headline inflation over the course of the year. This moderation was partly driven by actual price cuts in beer during mid-2025, combined with relatively slow price increases in spirits and tobacco products. The easing in this basket further reinforced the broader trend of weakening goods-related inflation.
Transport was not a major inflation contributor in 2025, as fuel prices remained largely stable throughout the year. Nevertheless, base effects linked to volatile fuel price movements in 2024 caused the transport basket’s contribution to headline inflation to shift direction twice during the year, underscoring the lingering influence of past price shocks even in a more stable pricing environment.
Taken together, these developments point to a significant change in the composition of inflation. While commodity-linked goods inflation cooled substantially, inflation pressures increasingly shifted toward domestically driven and typically more rigid components, particularly services. This shift is reflected in core inflation remaining above headline inflation in 2025, suggesting that underlying price pressures persist despite the overall slowdown.
The latter part of the year illustrated this tension clearly. Although many goods categories recorded deflation or price stability in the second half of 2025, particularly across all food baskets, housing and utilities experienced a sharp uptick. A quarterly rent price capture revealed a 4.8% annual increase, pushing housing and utilities inflation to 4.5% in December. This marked the basket’s highest annual inflation rate since December 2017, when it stood at 9.2%, and made it the fastest-rising category on a year-on-year basis by the end of 2025.
Miscellaneous goods and services followed a broadly similar trajectory to 2024, though with notable exceptions. The basket recorded periods of decline or stagnation due to decreases or the removal of certain bank fees, providing limited but meaningful relief in service-related costs such as banking and financial services.
Overall, 2025 was characterised by significantly slower price increases than the previous year, with inflation relief driven by actual price declines rather than offsetting effects from volatile components such as fuel. However, the late-year acceleration in housing-related costs highlights the uneven nature of the disinflation process.
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