Gaborone — The annual inflation rate has dropped from 7.9 per cent to 5.7 per cent due to improvements in food and non-alcoholic beverages, transport and miscellaneous goods and services sectors.
According to data from Statistics Botswana, inflation in the country is now within Bank of Botswana (BoB)'s medium-term objective of 3-6 per cent and economists foresee further drops.
The May Consumer Price Index (CPI), which measures the inflation rate performance, also indicate that the National CPI realised a rise of 0.4 per cent from 129.7 in April 2023 to 130.2 in May.
The food and non-alcoholic beverages group index rose by 0.5 per cent from 138.2 in April to 139.0 in May.
The rise in the food group index is attributed to the general increase in the constituent section indices except for oils and fats, which registered a drop of 1.1 per cent.
Bread and cereals are the highest constituent section indices followed by meat.
The miscellaneous goods and services group index registered an increase of 0.7 per cent from 132.5 in April to 133.4 in May 2023.
The increase was largely due to a rise in Personal Care, Insurance and Financial Services.
The transport group index increased from 149.5 to 150.4 per cent owing to an increase in the purchase of vehicles, operation of personal transport and transport services.
Additionally, the decrease in inflation between April and May 2023 was mainly due the upward adjustment of domestic fuel prices in May 2022.
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Whilst domestic inflation drivers are attributable to a drop in the annual inflation rate, independent economist, Mr Sennye Obuseng holds that external factors could also be at play.
"Something good is happening around global supply chains.
They are adjusting to the disruptions caused by COVID-19 and the Ukraine Russia conflict," he said.
Mr Obuseng said the country could expect further drops in the inflation rate.
"If everything moves according to the current trends, we can expect more drops, but you cannot rule out the possibility of shock.
It was external shocks that precipitated the last high inflation," he said.
Analysis provided by the African Bank Development Group in the 2023 African Economic Outlook (AEO) report show that inflation might indeed fall in the country.
"The build-up of inflationary pressures in 2022 is expected to ease gradually in the medium term as tight monetary policy interventions gain traction global supply chains remain weak partly reflecting Russia's persistent invasion of Ukraine, which is keeping global commodity prices and inflation elevated," the report reads.
Inflation last year was at 12.2 per cent and remained above the BoB's medium-term objective range.
This was caused by the domestic pass-through of high global commodity prices from Russia's invasion of Ukraine.
BOPA
