Monday, October 3, 2022

Transport Index fuels inflation to 14.6% in August

Botswana’s annual inflation quickened in August to its highest level, driven by price rises for fuel, food and miscellaneous services, official data released by Statistics Botswana shows.

The Consumer Price Index (CPI) data shows that annual inflation rate was 14.6 percent in August 2022, as opposed to 14.3 percent in July 2022, registering a rise of 0.3 percentage points. The increase in prices were mainly reflected through transport which rose by 9.3 percent due to rise in retail pump prices of fuel approved by the Botswana Energy Regulatory Authority (BERA) in late June 2022. Recently the energy regulator slightly slashed fuel prices saying global prices have been cooling down in the past two months. The impact of the recent fuel price slash will be reflected on the September CPI figures due on October 15.

Meanwhile for August, other indexes that registered a significant increase are Food & Non-Alcoholic Beverages (1.9 percent), Housing, Water, Electricity, Gas & Other Fuels (1.1 percent) and Miscellaneous Goods & Services (0.9 percent).

Kwabena Antwi (CFA), Portfolio Manager at Kgori Capital says the local assets management firm expects inflation to remain elevated but gradually reduce and sustainably trend within the BoB’s objective range from the second quarter of 2024.

Sharing the sentiments, is the banker – Absa Botswana which says in line with global developments of rising oil and food prices, inflation is posing a serious challenge for Botswana’s outlook. Another banker, First National Bank Botswana says domestic inflation should average 12.4 percent in 2022 fueled by the war in Ukraine.

Meanwhile Kgori Capital analysts say the firm expect another 75bps of rate hikes in 2022 by the central bank. The Bank of Botswana has to date hiked its Monetary Policy Rate three times (April, June and August). At the same time, there has been increased pressure from Botswana’s trading partners to normalise monetary policy due to the expectation of elevated levels of price growth this year.

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