NamPower’s modest tariff hike eases inflation concerns for 2025
Some relief
In a relief for Namibian consumers, NamPower’s announcement of a moderate 3.8% electricity tariff increase, bolstered by continued government subsidies, is set to keep inflationary pressures in check, FNB Namibia said in its inflation outlook for April. The Electricity Control Board of Namibia (ECB) had earlier this month granted the power utility a 3.8% tariff hike against a proposed 17.44% tariff hike.
“NamPower’s announcement of a more moderate 3.8% increase, supported by a second government subsidy, suggests reduced inflationary pressure from utilities and weaker second-round effects across other categories,” FNB Namibia said.
On the housing front,with inflation projected to ease, FNB said it would provide some relief to households grappling with finances.
“With inflation projected to ease to 3% year-on-year (y/y) in May and an annual average of 3.9% for 2025, the lower-than-expected hike signals reduced strain from utilities, offering a buffer to households already grappling with tight finances,” FNB explained.
“Although housing and rent prices are expected to remain elevated, the utilities’ outlook has improved. We had anticipated an electricity tariff increase of over 8%, assuming limited fiscal capacity to subsidise national tariffs for a second consecutive year,” it added.
Inflation on an annual average basis was forecasted to close at 3.9% for 2025, according to FNB’s projections.
“Looking ahead, we expect inflation to ease to 3% y/y in May, with the annual average moderating to 3.9% for 2025—slightly below our initial forecast of 4.2%. Our updated forecast reflects lower-than-expected pressure from housing and utilities, while other assumptions remain broadly unchanged,” FNB Namibia said.
The ease in inflation would help lessen the strain on already struggling households as indicated by weak private sector credit extended (PSCE) to households
“This is a welcome relief to consumers, especially against a backdrop of constrained household finances, as indicated by weak PSCE to households (2.6% y/y), robust growth in microlending (12.8%), and elevated NPLs to households remaining above 6%,” FNB Namibia said.