The average prices of goods and services are rising, with annual inflation ticking up to its highest point in 13 months due to fuel and food prices.
Data shared on Wednesday by Statistics Botswana indicates that inflation rose to 3.7 percent in September, from 1.4 percent in August, confirming expectations by the Bank of Botswana and various other economic commentators.
The major driver of higher inflation was fuel, whose pump prices were increased by an average of P1.60 in September due to the weakening of the pula following the July exchange rate framework changes. Food prices continued ticking up in June, reflecting the economy-wide mark-ups effected by producers and retailers since the central bank weakened the pula in July.
According to Statistics Botswana estimates, food inflation was measured at 5.4 percent in June, from five percent in August, indicating the increasing pressure on consumers. In August, the central bank adjusted its inflation expectations to an average of 3.5 percent, from an initial 2.7 percent, citing the acceleration of prices following changes to the pula exchange rate framework.
The bank said inflation could temporarily breach the six percent threshold in the second quarter of next year, before declining to average 5.9 percent. Other analysts expect inflation to reach as much as seven percent next year. On Tuesday, prominent economist, Keith Jefferis, told the Bifm annual conference that inflation could peak between eight and nine percent, due to the effects of the July changes to the pula’s value.
