Sunday, September 20, 2020

Inflation slides further in line with commodities prices

The monthÔÇôon-month inflation slouched down by a hefty 1.5 percent points ┬áas price in a range of goods and services eased, leaving the inflation rate at 10.2 percent, the Central Statistics Offices (CSO) reported on Tuesday.

The move is part of a down-ward trend, started at the beginning of the year, tracking the┬áfuel prices slow-downÔÇöa move that later led to interest rates cut by the Central Bank of Botswana.

“There were significant downward movement in┬áinflation across┬áa range of┬ácommodity groups, including food and non alcoholic beverages (from 21.5 percent to 20.1 percent), housing and electricity and water from (7.8 percent to 5.7 percent) and transport (-4.4 percent to -9.2 percent), the report said.

Leutwetse Tumelo, chief executive officer for Capital Assets Management, said that he expects inflation to continue to trend down to Bank of Botswana target range of six-to-three percent. However, he warned that a spike in crude oil might slow-down the downward trend.

“All this depends on the impact of the fuel prices,” he said, pointing out that since┬ásome sign of recovery in the international economy and fears of shortages in supply fuel prices have bounced back to above US $ 50 per barrel.
“There is a possibility of┬áinflation pushing up again, which might reduce the down-ward trend,” he said.

“While inflation currently remains┬áin double digit and above┬áthe Bank of Botswana’s inflation objective range of┬á3-6 percent, this largely reflects the lingering impact of the price increase that occurred in mid 2008.

Since then, upward pressure on prices has been generally subdued, and as the effect of these earlier increases dissipates in the coming months, overall inflation can be expected to continue on the current downward trend,” CSO said optimistically.

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