Costly education pushes up inflation

Mbongeni Mguni | Tuesday February 18, 2014 13:39

 

At its latest level, inflation continues within the Bank of Botswana’s three to six percent medium term inflation objective, used to set inflation expectations in the local economy.

January’s inflation is also well below the 7.5 percent recorded in the corresponding month last year, with Statistics Botswana attributing the drop to annualised decreases in inflation rates of major commodity groups such as transport and food.

For January, the education index, which tracks prices within private and public pre-school, primary, secondary and tertiary levels, rose by 7.4 percent, having last moved in January 2013.

“The rise was mainly attributed to increase in the private secondary, pre-primary and primary education school fees and school uniform prices for public primary schools,” a Friday statement from Statistics Botswana reads.

The education index is one of 12 indices used by the data agency to track price movements across different goods and services. Other indices to record increases during January include health by 4.5 percent, restaurants and hotels by 1.6 percent and alcoholic beverages and tobacco by 1.6 percent.  Statistics Botswana researchers said movements in health prices were within Outpatient Services, medical products as well as appliances and equipment, while the rise in the restaurant and hotels index was due to price increases within restaurants and cafes.

The increase in the alcohol and tobacco index is attributable to a five percent adjustment to the alcohol levy effected at the beginning of December last year.

The latest movements in annual inflation are in line with analysts’ projections of a slight increase to the key economic rate in the first quarter of the year.

“We expect inflation to increase moderately in the first quarter of 2014 to average 4.3 percent year on year, remaining well within the central bank’s objective range of three to six percent,” African Alliance analysts said ahead of the recent inflation announcement.

January’s inflation increase, the first since March 2013, comes at a time of generally benign price movement which analysts say stems from weak domestic demand.

Bifm analysts have said the low inflation figures seen since October were not specifically the result of targeted monetary policy.

“It would have been desirable to have such an achievement accompanied by increased domestic demand and achieved through deliberate policy instruments geared towards reducing inflation,” Bifm analysts said late last year.