Headline inflation slid down to the Bank of Botswana target margin, but analysts ruled out the possibility for the central bank to temper with the rates during the course of 2023.
“Inflation will continue to decline to a trough close to BoB’s 3 percent lower bound in July 2023. It will then rise above 6 percent by Q423, before sustainably trending within the 3-6 percent range in Q224,” said Kgori Capital analyst, Kitso Mokhurutshi, adding that “We do not expect any changes to MoPR during 2023.”
Statistics Botswana said Monday that inflation fell from 7.9 percent in April to 5.7 percent in May.
The Bank has assigned itself a medium-term objective range of 3-to- 6 percent.
Last week, Bank of Botswana Monetary Policy Committee left the rates on hold at 2.65 percent despite observing the slackening of inflation in the previous month. In March, annual inflation stood at 9.9 percent and dropped 2 percent to 5.7 percent in April.
The decrease in inflation between April and May was mainly due to the base effects associated with the upward adjustment of domestic fuel prices in May 2022 as it fell from 11.2 to 4.2 percent. Other commodities that fell included food and non-alcoholic beverages from 16.6 to 14.3 percent.
On Tuesday, Botswana Energy Regulatory Authority (BERA), announced price reduction on retail pump prices that will effect from Wednesday morning.
Pump prices for unleaded petrol 93 will slow-down by 22 thebe per litre and unleaded 95 will ease by 14 thebe per litre. Diesel 50ppm will slouch-down by 227 per litre and paraffin will drop 241 per litre. “I think that Bank of Botswana is going to do some observing,” an analyst at Imara Capital, Mogorosi Badisang said.
He said “there is still a lot of uncertainty out there” particularly with imported inflation from South Africa. Any move not to adjust the rates downwards will continue to dampen the economic activities in the country.
