Friday, September 18, 2020

December inflation falls in line with expectation

The Botswana national year-on-year inflation rate fell in December in line with expectations that the impact of lower energy costs will be felt in the next coming months.

Data from the Central Statistics Office (CSO) released on Thursday shows inflation fell by 1.3% from 15.0% in November to 13.7% in December.

The figures are in line with the market expectations at the back of a drop in crude oil prices since oil crisis last year.

CSO says the transport group index went down by 6.2% from 121.4 to 113.8 between the months of November and December.

Government Chief Statistician Anna Majelantle stated that this was largely due to the decrease in the constituent section index of Operation of Personal Transport, which went down by 11.1% from 118.9 in November to 105.7 in December.

“The drop in Operation of Personal Transport section index was attributed to the fall in the retail prices of both diesel and petrol by P1.00 per liter, which was effected on the 12th December 2008,” Majelatle stated.

Other indexes namely Alcoholic Beverages, Tobacco and Narcotics, Clothing and Footwear, Restaurant and Hotels, Food and non Alcoholic Beverages went up in the period under review.

Late last year, Stockbrokers Botswana analyst, Pulafela Isaacs, told Sunday Standard that their outlook for inflation has improved and the believe was that the downward inflation trend in inflation will continue in the short term.

“That being the case, however, we expect inflation figures for the month of November to be slightly higher than the one of September. This is in light of the 30% alcohol levy that was introduced on 1 November 2008,” stated Isaacs in December.

Stockbrokers Botswana prediction was right that the alcohol levy added almost 2% to the CPI figures for the month of November.

“Going forward, we expect inflation to continue with the downward trend and move closer towards the Central Bank’s medium range of 3-6% in the last quarter of 2009. International oil prices, which have been among the major culprits driving inflation, have been on a downward trend, on the back of falling demand as a result of the slow down in economic growth. We have seen a number of petroleum pump reductions.”

Now the market expects to see Bank of Botswana (BoB) lowering the cost of borrowing by reducing Bank Rate, last done in December.

Towards the Christmas break, BoB slashed its benchmark rate by half a percent from 15.5% to 15%.  

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