Inflation Ticks Up On Fuel Prices
Mbongeni Mguni | Monday November 19, 2018 13:08
The Ministry of Mineral Resources, Green Technology and Energy increased the retail pump prices of petrol and diesel by P0.65 and P0.73 per litre on October 15, being the second of the year after another increment in May.
On Tuesday, petrol and diesel prices went up by an average 35 thebe, a move expected to push inflation even higher. Oil companies have said petrol and diesel prices should ideally be about P1.85 higher than they currently are, on average. Statistics Botswana numbers indicate that nearly every commodity or service category making up the inflation category was on the rise in October, led by the transport sector under which fuel prices fall.
After transport, other price pressures during October came insurance, social protection as well as pre-primary and primary education. The latter is associated with private school’s revision of fees and levies for 2019, an exercise annually done in October together with enrolments for the next year.
At its latest level, inflation is within the Bank of Botswana three to six percent medium term target, used to not only forecast the movement of prices, but to set inflation expectations within the market.
In an October update, the central bank said upward pressures on inflation would come from fuel prices, imported inflation from South Africa and food prices.
Statistics Botswana’s data shows that food prices are currently stable and marginally declining. In September overall food prices were 0.9% lower than they were in September 2017. In October, they were 1.1% lower than they were in October 2017, led by cheaper bread and cereals, as well as oils and fats.
The trend is expected to be broken soon, however, as the Botswana Millers Association expect prices of maize meal and flour to rise significantly by Christmas due to pressure from South African farmers who supply more than 90% of local demand. The Bank of Botswana expects inflation to keep within the three to six percent target range within the next two years, trending towards the lower bounds of that threshold.