Sunday, September 27, 2020

Consumer inflation at historic lows

The inflation rate maintained its lowest level, but prices continue to rise for food, housing and utilities. 

The monthly inflation report released by Statistics Botswana shows that the annual inflation rate in July was 0.9 percent, same rate as June. This was the lowest rate since available records began in January of 1997, as prices slumped further for transport by 6.9 percent, following another decline of 6.7 percent in June. Recreation and culture  was down 0.7 percent compared to decrease of 0.8 percent in June. 

In contrast, inflation edged higher for food & non-alcoholic beverages (3.9 percent vs 3.6 percent), housing & utilities (5.9 percent vs 5.7 percent) and alcoholic beverages & tobacco (6.6 percent vs 5.4 percent). On a monthly basis, consumer prices were up 0.2 percent, after falling 1.2 percent in the previous month.

In May and June, Botswana Energy Regulation Authority (BERA) made massive reductions to retail pump prices for petrol, diesel and paraffin, a move that slowed the inflation rate which had grown by a larger pace to 2.5 percent, up from the 2.2 percent rate that stretched since December. The sudden upward movement in prices was caused by the 22 percent increase in the electricity tariff that was implemented beginning of April.

While the inflation rate might be at it its lowest, Bank of Botswana says inflation may rise above current forecasts if international commodity prices increase beyond current projections and in the event of upward price pressures occasioned by supply constraints due to travel restrictions and lockdowns. 

According to the central bank, inflation is forecast to revert within the 3 – 6 percent objective range in the third quarter of 2021, a significant downward revision from the April 2020 forecast in which BoB forecasted inflation to remain below the lower bound of the objective range for the remainder of the year.

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Sunday Standard September 27 – 3 October

Digital copy of Sunday Standard issue of September 27 - 3 October, 2020.