The annual rate of the domestic inflation slightly went up by 0.3 of a percentage point from 4.1 percent in December last year to 4.4 percent last month, latest Consumer Price Index of Statistics Botswana has shown.
Inflation data released by the government statistics agency late Friday shows that The January 2014 national Consumer Price Index registered an increase of 0.9 percent, advancing from 171.7 realized in December 2013 to 173.1 in January 2014.
Researchers at the statistics agency attribute the downward movement of annual inflation rate between January 2013 and January 2014 to the decrease in the inflation rates of major commodity groups such as Transport which went down from 10.9 to 1.9 percent, Food and Non-Alcoholic Beverages (from 7.5 to 3.6 percent) and Alcoholic Beverages, Tobacco & Narcotics(from 12.1 to 8.3 percent).
The domestic inflation eased from 5.7 percent in July 2013 to 5.6 percent in August, and was within the Bank of Botswana’s objective range of 3 ÔÇô 6 percent. The marginal decrease in inflation was attributable to a slowdown in price increases for various categories of goods and services.
A research fellow at BIDPA, Monnane Monnane, late last year attributed the decline to weak domestic demand and low international pressures emanating from lower commodity prices
Monnane suggested there is no need for policy makers at the reserve bank to be happy about the recent trend as it is not as result of their doing. “The downward trend is not a result of a deliberate policy decision.”
The BIDPA macro economist says that inflation remains cautious as any changes in administered prices such as alcohol levy, public sector wage increase and rise in utility prices could result in a subsequent upward movement.
The average national inflation rate has been decreased from 8.5 percent in 2011 to 7.5 percent by the end of 2012. This year further steady progress has been recorded, with inflation dropping to 4.8 percent as of October 2013, which is within the Bank of Botswana’s medium-term objective range of 3-6 percent.
On the international stage, global inflation trends have been on the downward trend since 2011, largely on account of subdued global demand.
As such Monnane says that, globally, inflation is expected to remain low in to 2014 because the expected economic activity in the US and Core Euro economies will not lead to major reduction in output gaps.
At the same time, commodity prices have fallen amid improved supply. “This will also put little pressure in the Emerging economies,” Monnane said.
