High inflation to last longer than forecast
Mbongeni Mguni | Thursday December 2, 2021 17:33
The central bank made the adjustment earlier today when announcing that the bank rate would be maintained at 3.75 percent. The bank rate is the benchmark rate for all interest rates in the market and any adjustment affects both borrowers and depositors.
Inflation has been trending at nine-year highs since June, peaking at 8.9 percent in July, then settling at 8.8 percent in October. The higher inflation has been driven by increases in Value Added Tax and other administered prices this year.
The director of the BoB’s Research and Financial Stability Department, Lesedi Senatla said two factors had influenced the revision of the period when inflation would return to the three to six percent target range.
“There has been some intervening information that we did not have at the time we made the original forecast,” he said. “What has happened is that we expect that in the first quarter of 2002, there will be some increases in private school fees which will add to inflation. “Within the 400 items of the Consumer Price Index used by Statistics Botswana, private school fees are given a sizeable weight and that will have an impact on inflation.”
He added: “Also, with the increase in international oil prices, there is bound to be an increase domestically and we have calculated what this would mean for inflation. “These two factors mean inflation will revert to the target range only in the third quarter, not the second quarter of 2022.”
The latest update by the central bank will come as a blow for consumers who have suffered rising prices of most goods and services this year.