Botswana’s inflation eased to 5.8 percent in June, down from 6.1 percent in May, as commodity prices remained stable.
According to the figures released by Statistics Botswana (SB) the annual rate of 5.8 percent realised in June 2013 was lower than the 7.3 percent recorded during the same month in 2012.
Comparison of inflation rate among regions from May to June showed that cities and towns’ went down to 5.5 from 5.9 percent, rural villages dropped to 6.6 from 6.9 percent while urban villages registered 5.8 from 5.9 percent.
In a statement released by SB, Inflation decreased across most commodity groups the major components such as transport, food and non-alcoholic beverages, which decreased by 2.5 and 2.8 percentage points, respectively.
The alcoholic beverages and tobacco decreased from 10.8 percent to 10.6 percent, while housing, water, electricity, gas and other fuels dropped from 3.3 percent to 3.2 percent. While furnishing, household equipment and routine maintenance transport fell from 5.2 percent to 4.5 percent and transport from 8.2 percent to 7.9 percent. Restaurants and hotels rate dropped from 8.5 percent to 8.0 percent and miscellaneous goods and services went down from 0.8 percent to 0.7 percent.
However, this trend was partially offset by increased inflation for clothing and footwear from 7.2 percent to 7.3 percent and health from 4.6 percent to 4.9 percent and recreation and culture from 4.3 percent to 4.4 percent. The June 2013 national Consumer Price Index was at 169.1, an increase of 0.2 percent on the May 2013 index of 168.7.
Thabelo Nemaorani, an Economist with Econsult, said the drop in inflation is attributable to the base effects of May 2013, which saw the inflation fall sharply from 7.2 percent in April to 6.1 percent in May, and underlying weak inflationary pressures.
“The drop in inflation is reflective of weak inflationary pressures, cheaper imports from South Africa because of a weak Rand and according to Bank of Botswana the subdued aggregate demand,” he said.
Nemaorani said owing to the imminent increase in the retail price of petrol, he expects inflation to briefly rise above 6 percent in the third quarter of 2013 before continuing its downward trajectory into the Bank of Botswana objective range of 3-6 percent.
However, he is wary of international events affecting inflation rate.
“Inflation in other countries, especially our trading partners like SA, can either┬áincrease or reduce the inflationary pressures in Botswana. ┬áBecause Botswana imports most of its goods from RSA, an increase in price levels in SA would mean an increase in prices of most of Botswana’s imports, which will in turn drive price levels in Botswana up, and vice versa,” he said.
The trimmed mean measure of core inflation was revised downwards from 6.0 percent to 5.7 percent, while inflation, excluding administered prices, decreased from 6.1 percent to 5.7 percent. Nemaorani projects inflation to end the year below 5 percent.