Inflation to average 7% in 2012 – BoN

Namibia is likely to miss the regional inflation target range of 3 to 6% as inflation is set to average around 7% in 2012, the Governor of the Bank of Namibia has said.
In an interview on Wednesday, the central bank chief, Ipumbi Shiimi told the Economist that inflation will average 7% this year peaking at just below 8%.
He said: “We don’t think (inflation) is going to be double digit levels. We are not worried that it is going to runaway.”
Although optimistic that inflation will remain within “tolerable levels”, Shiimi was somewhat concerned that the average inflation for the first quarter of the year, which incidentally is 7%, remains relatively high compared to 3.5% in the same period last year.
The governor also cautioned that inflation will, to a greater extent, depend on the price of oil which have remained high since the beginning of the year, and to taxi fares which are set to go up at the end of this month by more than 10%.
Denying that the current high oil prices were a result of speculation, Shiimi said he hoped for a speedy resolution to the Iranian crisis which has seen the US impose sanctions on Iran resulting in a worldwide import ban of Iranian oil.
“The US has banned oil imports from Iran which is a major oil supply. If countries are being forced to import oil from somewhere then it means there will be a shortage of oil on the market and naturally prices will go up.
“We hope things will be resolved in Iran because the sanctions imposed on the country have affected the supply of oil.”
The Bank of Namibia’s sentiments on inflation are in line with Capricorn Investment Holding’s inflation outlook  for 2012. Economists at Capricorn said last week that they don’t anticipate any immediate easing of food and energy costs in the near future and as such expect the domestic inflation rate to remain above the 6% upper limit of the target adopted by other central banks in the region.