the monitor

Food inflation cools but stubborn spots remain

MIXED PICTURE Inflation is generally down, but several areas of concern remain PIC MORERI SEJAKGOMO
MIXED PICTURE Inflation is generally down, but several areas of concern remain PIC MORERI SEJAKGOMO

Inflation averaged 2.8 percent in 2024, with food inflation largely slowing through the year for most commodities, although figures from Statistics Botswana indicate some stubborn areas.

According to figures released by the data agency last week, inflation closed the year at 1.7 percent, having started 2024 at 3.9 percent - the latter representing its highest point in the 12 months.

Within the figures, annual food inflation generally trended downwards during the year, moving from 4.8 percent to 4.7 percent between November and December, a significant drop from the double-digit highs recorded during 2022 when inflation reached 14-year highs.

In the 12 months to December 2024, the prices of oils and fats declined the most, retreating by 8.2 percent and offering some relief for consumers who had long complained of price gouging by retailers. Government removed Value Added Tax on cooking oils in February 2023, responding to outrage from consumers as prices soared in 2022. In the 12 months to July 2022, Statistics Botswana estimated that the average prices of oils and fats had risen by 40.8%.

Other food items, whose average prices rose slower in the period to December 2024, include mineral waters, soft drinks, meat and fish.

However, on the other end of the scale, the fastest rising prices last year were those for coffee, tea and cocoa, which rose by an average 13.3%, followed by fruits (9.7 percent) as well as sugar, jam, honey and related products (9.5 percent).

Vegetables, whose prices and limited availability have vexed consumers since the inception of the horticultural import ban in January 2022, rose by 5.7 percent in the 12 months to December 2024. Surprisingly, in the 12 months to November 2024, average vegetable prices were up 10%, suggesting a sharp drop during December.

The latest figures, however, are cold comfort for consumers as the lower inflation figures simply mean prices rose at a slower pace, rather than that prices declined. This is true except for cooking oils and fats, whose prices actually declined in the 12 months to December 2024.

Director of macroeconomic policy at the Ministry of Finance, Walter Matekane, told the Local Government budget pitso on Friday that the low inflation was below the Bank of Botswana’s target range for the economy.

The central bank estimates that inflation of between three and six percent is required for a healthy economy where moderate price increases incentivise production, innovation and the growth of enterprises.

However, for consumers, wage stagnation and high levels of unemployment, mean the lower levels of inflation in 2024 were largely arithmetic.

Meanwhile, Statistics Botswana figures for December show that the primary drivers of the annual inflation rate were Food & Non-Alcoholic Beverages as well as Miscellaneous Goods & Services.

The Transport group, which is mainly influenced by the prices of fuel and lubricants, continued a deflationary movement marked by continuous downward adjustments of the price of fuel in the country by the energy regulator.

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