Annual inflation quickened in July to its highest level, driven by price rises for fuel, food, fuel and miscellaneous services, official data from Statistics showed on Monday.
The Consumer Price Index (CPI) data shows that annual inflation rate was 14.3 percent in July 2022, as opposed to 12.7 percent in June 2022, registering a rise of 1.6 percentage points.
The increase in prices were mainly reflected through transport which rose by 9.2 percent due to rise in retail pump prices of fuel approved by the Botswana Energy Regulatory Authority (BERA) in late June 2022. Other indexes that registered a significant increase are Food & Non-Alcoholic Beverages (1.7 percent), Housing, Water, Electricity, Gas & Other Fuels (1.2 percent) and Miscellaneous Goods & Services (0.9 percent).
The SB data further shows that the All-Tradeables index rose by 3.7 percent in July 2022, from 129.4 recorded in June 2022 to 134.2 while the Imported Tradeables Index moved from 131.9 in June to 137.6 in July 2022, a rise of 4.3 percent. The Domestic Tradeables Index realised a growth of 2.0 percent between the two periods, moving from 122.4 in June to 124.8 in July. The Non-Tradeables Index moved from 118.7 in June to 119.0 in July, an increase of 0.3 percent.
With back to back hike in fuel prices by the Botswana Energy Regulatory Authority, experts have cautioned that efforts by the central bank to thwart the raging cost of living might prove futile. The domestic inflation is now forecast to remain above the central bank’s 3 – 6 percent objective range in the near term but is expected to fall from the third quarter of 2023 and revert to the objective range during that quarter to reach 6.0 percent.
The central bankers have for several months now cautioned that risks to the inflation outlook in Botswana are skewed to the upside. The risks, according to the Bank of Botswana economists include the potential increase in international commodity prices beyond current forecasts; persistence of supply and logistical constraints due to lags in production. The members of the Monetary Policy Committee (MPC) are set to meet on August 25 to revise the bank’s Monetary Policy Rate, previously known as Bank Rate.
A Business Expectation Survey carried by the Bank of Botswana for the second quarter of 2022 and the year 2023 shows that local firms expected cost pressures to continue rising in the second quarter of 2022, mainly attributable to the increase in input costs.
The BES collects information on perceptions about the prevailing state of the economy and expectations during the survey period from a sample of 100 businesses in about thirteen economic sectors, namely: Agriculture, Forestry and Fishing; Mining and Quarrying; Manufacturing; Water and Electricity; Construction; Wholesale and Retail; Transport and Storage; Accommodation and Food Services; Information and Communications Technology; Finance, Insurance and Pension Funding; Real Estate Activities; Professional Scientific and Technical Activities; and Administrative and Support Activities.
The latest BES report shows that the respondents’ expectations about domestic inflation were higher than the Bank of Botswana’s 3 – 6 percent objective range in 2022 and 2023.
With all these developments, local firm’s expectation on inflation now ranges between 2.3 percent and 20 percent (averaging 8.5 percent, up from 8.3 percent in the last survey) for 2022 and between 2.5 percent and 15 percent (averaging 7.9 percent, up from 7.5 percent in the previous survey) for 2023.