According to figures released by Statistics Botswana (SB) this week, the May 2013 annual inflation figures fell by 1.1 percentage points to 6.1 percent inching closer to the Bank of Botswana 3-6 percent inflation objective.This means general prices of goods and services increased by a lower rate of 6.1 percent between May 2012 and May 2013 down from a 7.2 percent rate between April 2012 and the April 2013.Modest current inflationary pressures also contributed to lower May annual rate as the monthly consumer inflation eased to 0.3 percent, from 0.6 percent in April.
Although the modest monthly inflation rate of 0.3 percent played a part to the lower annual inflation rate for the month, the falling away of the May 2012 large price increases from the calculation was the key factor in the 1.1 percentage drop in the annual rate.Commonly referred by economists as the base effect, the high price changes in May 2012 that have fallen out of the 12 month comparison include last year's increases in water and fuel prices which both carry significant weights in the CPI basket.
