Inflation, as measured by the Consumer Price Index (CPI), eased last month, but analysts warned consumers to hold their smiles as the events in the global scene are yet to be felt on the local economy.
Statistics Botswana data released on Friday showed that the national year-on-year inflation rate stood at 8.2 percent in April 2011, which was a decrease of 0.3 of a percentage point from 8.5 percent in March.
Investec, the local asset manager, said the slight reduction in the CPI in April was driven by base effects.
“While the full impact of higher commodity prices (fuel and food) is yet to hit the local economy, the increases in the individual indices suggest that companies have already started passing on the higher input costs associated with strong commodity prices,” Carol-Jean Harward, Investment Analyst at Investec, said.
All the indices were up month on month, with significant increases seen in the recreation and culture index (+4.1 percent), health (+3 percent), food and Non-alcoholic Beverages (+2.4 percent), Miscellaneous Goods and Services (+2.4 percent).
Clothing and Foot wear was (+1.9 percent), Alcohol and Tobacco (+1.4 percent), Transport (+1 percent) and Restaurant and Hotels (+1 percent).
Food inflation came in higher than expected, driven mainly by the 14.2 percent increase in Milk, Cheese and Milk products as the milk prices doubled during the month due to acute milk shortages in the country on the back of the Foot and Mouth outbreak in the region. Other significant month on month increase in the food component came from the Oils and Fat (+3 percent), Vegetables (+3 percent) and Sugar, Jam. Honey and Confectionery (+3.4 percent).
Food inflation came in higher than expected driven mainly by the 14.2 percent increase in milk, cheese and milk products as the milk prices doubled during the month due to acute milk shortages in the country on the back of the Foot and Mouth outbreak in the region.
Other significant month on month increase in the food component came from the Oils and Fat (+3 percent), Vegetables (+3 percent) and Sugar, Jam. Honey and Confectionery (+3.4 percent).
Health index was up 3 percent m/m on the back of a 4.6 percent m/m increase in Hospital services. Transport was up 1 percent driven mainly by an increase in Operation of Personal transport as fuel prices continue to rise.
The Transport index continues to be the biggest year on year contributor of inflation with Food index following closely on its heels.
“The continued weaker Pula against the Rand during the month and over the year has also exacerbated our inflation numbers as seen in the imported inflation m/m increase of 1.9 percent.
The negative surprise in the April numbers compared to our expectation, as well as the recent increase in fuel prices pushes our year end forecast to 8% from the previous 7.8 percent,” said Investec.
Statistics Botswana said the towns and cities’ index registered an increase of 1.5 percent between March and April, from 143.2 to 145.3. The rural villages’ index rose by 1.4 percent, from 146.6 in March to 148.8 in April.
It showed that the towns and cities’ inflation rate went down by 0.4 of a percentage point from 9.3 percent in March to 8.9 percent in April.
The urban villages’ inflation rate moved from 8.7 percent in March to 8.5 percent in April, showing a decrease of 0.2 of a percentage point. The rural villages’ inflation rate was 6.0 percent in April, the same rate as in March.
In April 2011, the national Consumer Price Index was 146.0, up by 1.5 percent on the March level of 143.8. The urban villages’ index recorded an increase of 1.6 percent, from 143.2 to 145.5 between the two months.