This study examines the impact of climate change on inflation dynamics in Namibia, with an extension to the Southern African Customs Union (SACU) region, using a combination of time-series and panel data approaches. For panel analysis, annual data are employed to assess both short- and long-run inflation responses to climate-related variables and capture potential nonlinearities and asymmetric effects using the nonlinear autoregressive distributed lag (NARDL) framework to evaluate the influence of extreme weather events across SACU member states over the period 2005 to 2023. In addition, the study further employed time series data from 1990 to 2023 for country-level analysis. The results indicate that variations in total emissions do not exert a statistically significant effect on inflation in Namibia. In contrast, declines in global precipitation are associated with a persistent and economically meaningful increase in inflation in the long run. Furthermore, adverse precipitation shocks are found to be a significant driver of inflationary pressures in both Namibia and the broader SACU region. These findings suggest that climate-related supply-side disruptions play an increasingly important role in shaping inflation outcomes. Overall, this study highlights the relevance of climate risks for monetary and fiscal policy. Incorporating climate variables into inflation forecasting frameworks may enhance policy calibration, while targeted fiscal and social interventions can help mitigate inflationary effects following climate shocks.
Kavaleka et al. (2026) studied this question.