Windhoek: Bank of Namibia (BoN) Governor, Ebson Uanguta, on Wednesday announced an upward revision of the 2026 domestic inflation forecast to 3.7 per cent, warning that government subsidies shielding consumers from oil shocks may expire within six months.

According to Namibia Press Agency, the 0.2 percentage point revision follows a period in which headline inflation averaged 2.5 per cent during the first quarter of 2026. However, the central bank expects price pressures to accelerate over the remainder of the year. Uanguta attributed this shift to the 'protracted energy price shock triggered by the war in the Middle East'.

Brent crude oil prices peaked at approximately US dollars 118 per barrel in late March 2026 following supply disruptions in the Strait of Hormuz. 'This is anticipated to generate significant inflationary pressures for oil-importing economies like Namibia,' the governor said.

While the bank expects inflation to moderate to 3.4 per cent in 2027, Uanguta stated that 'recent policy measures to insulate the domestic economy' are currently the primary defence against global volatility. Responding to questions during the monetary policy announcement, Uanguta said current forecasts account for oil prices 'hovering at up to US dollars 120 per barrel'. He emphasised that while the government 'has done its best to mitigate, or not to allow, the increase in international oil prices to be passed on to the public', its financial capacity to do so is limited.

'If it goes on for too long, say it persists beyond six months, obviously the buffers that the government has built to be able to do the mitigation may not last up to that time,' Uanguta cautioned. He added that a depletion of these buffers would lead to tax-related effects and direct price increases for consumers.

In a separate development regarding the national currency, Uanguta confirmed that the BoN is conducting laboratory tests on N dollars 5 coins following reports that they are disintegrating. He suggested that improper handling by the public may be a contributing factor. 'The coins will also be very much vulnerable if we are hitting them with elements that are much harder than the materials used to manufacture them,' he said. Uanguta added that the central bank will keep the public informed on the laboratory findings.