Botswana’s annual inflation slightly went up in December (12.4 %) compared to the 12.2 percent registered in November 2022, Consumer Price Index (CPI) figures released by Statistics Botswana on Friday show.
According to the latest CPI figures, applying significant pressure to the annual inflation rate in December 2022 were Transport at 6.8 percent and Food & Non-Alcoholic Beverages at 2.4 percent.
Despite the slight upward movement, inflation is expected to ease grip on the local economy following a fall in prices of fuel which has been driving prices up. In late December 2022, the Botswana Energy Regulatory Authority (BERA) slashed the Diesel Retail pump price by 44 thebe per litre. This past Thursday, another cut was made this time around also including Petrol which saw Retail pump price of unleaded petrol 93 & 95 going down by 96 thebe per litre respectively. The Retail pump price of diesel has also been decreased by 149 thebe per litre.
While inflation still remains in the double digit, and way above the Bank of Botswana’s upper threshold of 6 percent, the latest figures and developments marks a moment of relief for consumers who watched helplessly as prices rapidly climbed since 2021. The softer readings add to growing signs that the worst inflation bout is steadily waning.
To tame the spiraling inflation and bring it down to Bank of Botswana’s tolerable range of 3-6 percent, the central bank has effected sharp interest rate increases, rising the monetary policy rate three times this year, from 1.14 percent rate to 2.65 percent.
Kabo Thutwe, Investment Analyst at Kgori Capital said on Friday that the local asset management firm expects domestic inflation to remain elevated but gradually reduce and sustainably trend within the central bank’s objective range from the last quarter of 2024.
Thutwe said that the central bank is likely to tap brakes on Monetary Policy Rate (MoPR) rises following trends that suggest that the runaway inflation maybe on slowdown.
“We do not expect any rate hikes in the near term as the central bank continues to monitor improving inflation levels”, says Thutwe.
Thutwe says while inflation trended higher for the month on the back of softer growth in transport inflation which grew 0.6 percent month on month primarily driven by a 2.7 percent increase in vehicle prices.
He also highlights that inflation will trend lower after a decrease in petrol retail pump prices that were effected on Thursday. The central bankers have also made a similar projection on the cost of living with the Bank Governor, Moses Pelaelo telling journalists shortly after the 01 December2022 MPC meeting that the projected decrease in inflation into the medium term is due to the dissipating impact of the earlier increases in administered prices, subdued domestic demand, current monetary policy posture, expected decrease in global inflation and international commodity prices. Meanwhile global fuel prices, which have tumbled, are likely to keep lowering overall inflation in the coming months.
