Saturday, July 2, 2022

Analyst predict inflation will not rise significantly

City analysts said on Friday they expect inflation to remain fairly stable ahead of the release of the Consumer Price Index (CPI) results on Monday.

“Despite the 10 percent increase in the alcohol levy, we expect inflation as measured by the CPI to remain fairly stable following reduction in most basket items during the December period as most retailers wanted to boost their sales ahead of the festive season,” said Karabo Tladi of Motswedi Securities.

He said that alcoholic beverages, tobacco and narcotics only contribute around 9 percent of the total CPI. Tladi said some of the factors that will influence the inflation rate would be the generally lower prices in December meant to boost sales as well as the increase in the alcohol levy beginning December last year.

“We don’t expect much change in inflation figures. We expect them to be constant. If there are any changes, we expect a minimal change of between 20 and 30 basis points,” said Mothibi Mosimane of Stock Brokers Botswana. Mosimane said the biggest effect to inflation is usually from consumer products and fuel.

“We have not seen significant food price increase nor was there any fuel price adjustment in the period,” said the research analyst.

For Capital Securities analyst, Aobakwe Mokgethi, inflation should remain above the Bank of Botswana’s target range of between 3 and 6 percent.

“As you might be aware, inflation rose 0.2 percent points to 7.2 percent in September. Inflation increased across most commodity groups. My expectation is that the December CPI figure will be marginally higher,” said Mokgethi. The analyst predicts that food and non-alcoholic beverages, alcohol and tobacco, housing, water, electricity, gas and other fuels should continue to edge the inflation higher.

“Brent crude prices have been on a steady increase and this could have a huge impact on inflation going forward taking into account that government continues to release fuel from its strategic reserves to petrol retailers,” said Mokgethi.

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