Saturday, May 8, 2021

Consumer Inflation on an upward trajectory

Data from the national statistics agency – Statistics Botswana is showing that Consumer prices once again rose in the second month of the year. 

The latest Consumer Price Index stats published on Monday showed that the annual inflation rate in February 2021 stood at 2.4 percent compared to the January 2021 rate of 2.3 percent. 

Statistics Botswana says Housing, Water, Electricity, Gas & Other Fuels (1.3 percent), Food & Non-Alcoholic Beverages (0.5 percent) contributed significantly to the February annual inflation rate rise. 

The comparison of inflation rates for regions between January 2021 and February 2021 showed that the Rural Villages rate increased from 2.1 to 2.3 percent, by 0.2 of a percentage point. Cities & Towns inflation rate rose by 0.1 of a percentage point, from 2.0 percent in January to 2.1 percent in February, while the Urban Villages rate was 2.7 percent in February, registering a growth of 0.1 of a percentage point on the January rate of 2.6 percent.

The rise in both January and February is seen as setting an upward trajectory that has been anticipated as government and businesses ready to hike fees and charges. 

The rise in prices is expected to be felt this year following a three-year decline in the inflation rate, which averaged1.89 percent last year, down from 2019’s average of 2.79 percent, 2018’s 2.2 percent and 3.3 percent in 2017. 

While overall prices might have risen by only 1.89 percent in 2020, the numbers do not truly reflect the reality of rising prices amid a pandemic, where costs have increased for basic needs and commonly used services faster than what the inflation rate reflects. The country’s consumer price index (CPI), is made up of twelve group indices, intended to represent average consumer patterns.

With the planned increase of value added tax (VAT) and other service charges expected in April, economists say costs will rise for businesses and this will be reflected through increased prices to households.

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