Botswana consumer inflation moved up slightly in December in line with forecasts, data showed on Friday, driven mainly by alcoholic beverages, tobacco & narcotics group.
Statistics Botswana said on its monthly Consumer Price Index (CPI) that In December 2010, national year-on-year inflation rate stood at 7.4 percent, up by 0.2 of a percentage point from 7.2 percent in November 2010.
“The Alcoholic Beverages, Tobacco & Narcotics group index registered an increase of 1.0 percent from 180.4 to 182.1 between the two months,” Statistics Botswana said.
“This was attributed to a rise in the constituent section index of Alcoholic Beverages (1.0 percent) and Tobacco (0.5 percent). The rise in the Alcoholic Beverages section index was largely due to a 10 percent increase in alcohol levy which effected on the 1st December 2010,” it said.
Analysts had forecast that inflation would end 2010 higher owing to exogenous factors and the weaker Pula.
Asset manager Investec had predicted that inflation will continue rising into the first few months of 2011 to a high of 7.9 percent in February.
“Even though the flat month on month number pulls our inflation forecast slightly lower, it does not alter our inflation and interest rate outlook,” said Carol-Jean Harward, an Investment Analyst at Investec.
The top five asset manager in Botswana was spot on as it forecast that inflation was to end the year higher at 7.4 percent on the back of higher global commodities prices, a weaker Pula and albeit small, the effects of the 10 percent increase in alcohol levy.
The levy was meant to help control alcohol abuse although it largely hurts the Sechaba Brewery Limited stock.
Sechaba is the listed vehicle for the two local brewing firms in the country namely Kgalagadi Breweries Limited (KBL) and Botswana Breweries Limited (BBL).
However, Statistics Botswana data showed that group indices were stable between November and December 2010, recording movements of less than 1.0 percent except for the alcoholic beverages, tobacco & narcotics group index that recorded an increase of 1.0 percent.
The furnishing, household equipment & routine maintenance group index registered an increase of 0.9 percent from 140.4 in November to 141.7 in December.
This was attributed to a rise in the constituent section index of goods & services for household maintenance (1.9 percent), and Household Textiles (1.1 percent).
The housing, water, electricity, gas & other fuels group index moved from 128.1 in November to 128.8 in December, recording an increase of 0.5 percent and it was attributed to a rise in the constituent section index of rent paid by tenants (1.0 percent), which follows the quarterly survey on private rentals.
The cities and towns’ inflation rate registered a drop of 0.1 of a percentage point, from 8.2 percent in November to 8.1 percent in December 2010.
On the other hand, the urban villages’ inflation rate moved from 6.7 percent in November to 7.2 percent in December, an increase of 0.5 of a percentage point, while the rural villages’ inflation rate recorded an increase of 0.8 of a percentage point, going up from 5.4 to 6.2 percent between November and December 2010.
The December national Consumer Price Index stood at 140.6, an increase of 0.4 percent on the November index of 140.1.
The Cities and Towns’ index recorded an increase of 0.2 percent from 139.5 to 139.8 between the two months. The Urban Villages’ index moved from 139.3 to 139.9, recording an increase of 0.5 percent, while the Rural Villages’ index went up from 143.2 to 144.0, registering an increase of 0.5 percent.