In line with expectation, the national year-on-year inflation rate fell slightly as a result of decreases in the Food and Non Alcoholic beverages group also affirming the view that underlying inflationary pressures are low, both domestically and internationally.
Central Statistics Office (CSO) monthly update showed inflation rate stood at 6.9 percent in October, down by 0.1 of a percentage point from 7.0 percent in September.
Analysts at Bifm and Motswedi Securities see inflation going into 2010 to remain in single digit levels.
“However, any increases in administered prices such as electricity tariffs and any sharp rise in fuel prices on the international market may dampen the downward momentum and exert more inflationary pressures into the economy,” stated a review by Motswedi Securities.
Motswedi expects the numbers to average around 6.8% over the next 12 months while Bifm forecast is that inflation will fluctuate in a range between 5.5% and 7.5% over the next 12 months.
“The main uncertainty stems from international oil prices, and any sharp increase in oil prices from current levels would push Botswana inflation up again,” stated economist Keith Jefferies, Chairman of Bifm Investment Committee.
Bank of Botswana’s inflation objective range is 3-6%.
CSO data stated that all group indices showed stable movements between September and October with Furnishing, Household Equipment & Routine Maintenance recording a change of 0.3 percent as the highest.
The Furnishing, Household Equipment & Routine Maintenance group index increased from 127.8 in September to 128.1 in October.
This was as a result of increases in the constituent section indices of Household Textiles, which went up by 1.3 percent from 119.5 to 121.1, Goods & Services for Household Maintenance which rose by 0.7 percent from 144.9 to 146.0 and Glassware, Tableware & Household Utensils, which increased by 0.5 percent, from 131.7 to 132.3 between the two periods.
The Food & Non-Alcoholic Beverages group index dropped from 151.7 in September to 151.6 in October.
This drop was due to decreases in the constituent section indices of Bread & Cereals, which decreased by 0.8 percent from 163.4 to 162.1, Oils & Fats, which declined by 0.8 percent from 188.6 to 187.2, Milk, Cheese & Milk Products, which fell by 0.6 percent from 152.8 to 151.9, and Vegetables, which also dropped by 0.6 percent from 149.4 to 148.4.
On the other hand, the towns and cities’ inflation rate went up by 0.4 of a percentage point from 5.4 percent in September to 5.8 percent in October.
The urban villages’ inflation rate fell by 0.2 of a percentage point from 7.1 to 6.9 percent between September and October.
The rural villages’ inflation rate was 9.5 percent in October, down by 1.3 percentage points on the September rate of 10.8 percent.
In October 2009, the national Consumer Price Index was 130.4, an increase of 0.1 percent on the September level of 130.3.
The towns and cities’ index increased by 0.2 percent between September and October, from 128.3 to 128.5, while the rural villages’ index went down by 0.2 percent – from 135.4 to 135.1 between the two months.
The urban villages’ index fell by 0.1 percent, from 130.3 in September to 130.2 in October.