Brian Benza
19 August 2008
Driven by the transport, food and non-alcoholic beverages group indices, the national year-on-year inflation rate for the month of July 2008 stood at 15 percent, up from the 14.5 percent in June, the Central Statistical Office (CSO) has reported.
The transport group index increased by 6.1 percent - from 135.1 to 143.2 between the two months. The rise is largely due to the hike in retail pump prices for both diesel and petrol by P1.04 and P1.09 per litre respectively. The fuel price increase lead to an increase in the constituent section index of operation of personal transport, which rose by 9.7 percent.
The continued rise in the annual inflation figure has worsened Botswana's position in the region. Botswana now has the highest inflation in the region excluding crisis-torn Zimbabwe.
The food and non-alcoholic beverages index group in Botswana moved from 129.6 to 132.1 due to a general increase in the food prices. The constituent section indices, which recorded the highest increases, are - bread and cereals (3.5 percent), milk, cheese and milk products (3.2 percent) and sugar, jam, honey, chocolate and confectionery (2.3 percent).
The cities and towns' inflation rate went up from 15.8 percent in June to 16.1 percent in July. The urban villages' inflation rate was 14.1 percent, up from the June rate of 13.5 percent. The rural villages' inflation rate registered an increase from 12.9 percent in June to 13.7 percent in July.
"The July national Consumer Price Index was 122.1, registering an increase of 1.9 percent on the June index of 119.8. The cities and towns' index moved from 120.0 to 122.4 between June and July, an increase of 2.0 percent. The urban villages' index also went up by 2.0 percent - from 119.3 to 121.7 between the two months, while the rural villages' index rose from 119.3 to 121.0, recording an increase of 1.4 percent," said the CSO report.
Due to persistent food and oil price increases, Botswana has been hard hit by the imported inflation since late last year. But now the pressure is expected to subside marginally as food prices on the international markets have stabilised while oil prices have come down.
In a direct response to developments on the international markets, pump prices of fuel went down by 50 thebe last week in Botswana. The Bank of Botswana also announced that it will not interfere with interest rates for now. The banks spokesman, Chepete Chepete said it is expected that inflation will maintain an upward trajectory in the short term and peak in the first quarter of 2009, before declining to the medium-term inflation objective in the first half of 2010.
"Although the risks to the inflation outlook continue to be predominately upward, the current monetary policy stance is expected to moderate demand pressures going forward. In the circumstances, the Bank considers that the current level of interest rates is sufficient to restrain the second-round effects of past increases in fuel prices and other input costs and influence expectations towards a low medium-term inflation path without stifling economic growth," he said.
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