BoB expects softer inflation despite risks

Friday, May 03, 2024 | 380 Views |

Cooling down: Cooking oil became emblematic of runaway inflation in 2022, as regional supply constraints pushed prices to never-before-seen heights. Govt zero-rated Value Added Tax for cooking oil last year and it is now amongst commodities showing negative price growth on a 12-month basis

The Bank of Botswana now expects inflation to average 3.2% this year, from a February forecast of four percent, largely due to subdued domestic demand and technical calculations associated with Value Added Tax returning to 14% from 12% last year.

The central bank projects that inflation will temporarily trend below three percent, before moving into the three to six percent objective range from the third quarter of the year, into the medium term. Inflation in April is expected to drop to 2.3 percent from 2.9 percent in March.

BoB executives told BusinessWeek that inflation was expected to peak at 5.6 percent between now and the end of 2025.

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