Utilities tariff hike edges inflation up

Staff Writer | Monday May 18, 2015 15:38

According to figures released by Statistics Botswana (SB) on Friday, the increase in water and power tariffs last month were among some of the significant contributors to the rise in the April inflation figures.

The April increase marks the return of the inflation figure to within the Bank of Botswana’s desirable 3-6 percent range.

 However annual inflation in April 2015 was lower than the 4.5 percent recorded during the same month in 2014.

The slowing pace of the annual inflation rate between April 2014 and April 2015 was attributed to the decrease in prices of commodities in the main component of transport, which dropped by 5.6 percentage points.

The most notable price increases between March and April, included, insurance, newspapers, photographic equipment, water and power tariffs. “The miscellaneous goods & services index group went up from 139.6 to 148.0, registering an increase of 6.0 percent between March and April. The increase was attributed to the general increase in the section indices, notably insurance (9.1 percent). “The increase in water supply and miscellaneous services section index was attributed to the revised water tariffs, which were effected on April 1, 2015.

“The rise in the electricity, gas and other fuels section index was largely due to the hike in the electricity tariffs by 7.5 percent for domestic consumers who consumed less than 200 kWh and 10 percent for those who consumed more than 200 kWh, which were also effected on the April 1,  2015,” read a statement from SB. Analysts at RMB Capital Markets believe that inflation is likely to remain within BoB’s 3-6 percent medium term range, but risks remain on the upside driven by the expected grain drought, possible increase in administered prices and base effects from 2014. “Oil prices will remain subdued in the short run due to the surplus above ground inventory levels, and an expected 13 percent increase in oil production from the U.S. rigs in the month of May.

“This, coupled with the stronger Pula versus Rand, continue to present a soft outlook for inflation,” said RMB.