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Like many other nations, Botswana is struggling to deal with the problem of growing inflation. According to the most recent consumer price index statistics, Botswana’s inflation rate rose to 5.2% in May 2023, above the Bank of Botswana’s goal range’s midpoint. The cost of living for Batswana has significantly increased as this reading is the highest since November 2018. Numerous variables, including rising food prices, notably for commodities like sunflower oil, tomatoes, and dried beans, as well as rising fuel prices, are to blame for the inflationary spike. Impacting both household purchasing power and broader economic growth are these inflationary pressures. We examine the specifics of Botswana’s inflation situation, its effects on consumers, and the prospects for the country in this article.
According to Statistics Botswana’s announcement of the consumer price index for May 2023, the annual headline inflation rate has risen from 4.4% in April to 5.2%, exceeding the 4.5% midpoint of the Bank of Botswana’s monetary policy target range.
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20 things that have become more expensive
Highest Inflation Rate since November 2018
This result is the highest since November 2018, when the inflation rate was also 5.2%, according to the statistics body. A low base, marked by low fuel costs, was recorded in May 2022, which is what caused the most recent increase.
Core Inflation Remains Lower
Food, non-alcoholic drinks, gasoline, and energy are not included in core inflation, which was measured at 3.1% in May 2023 and is considerably lower than the headline rate. This shows that the rising prices of food and fuel have significantly impacted the headline inflation rates.
From May 2022 to May 2023, the following products and services saw some of the biggest yearly price increases:
- Sunflower oil: +30.3%
- Tomatoes: +29.4%
- Dried beans: +27%
- Salad dressing: +18.4%
- Beef offal: 17.6%
- Sweet potatoes: +16.9%
- Chocolate bars: +16.5%
- Stewing beef: +15.4%
- Mixed vegetables (tinned): +14.9%
- Whiteners: +13.4%
- White wine: +13.2%
- Fruit juice: +12.8%
- Beetroot: +12.6%
- Instant yeast: +12.6%
- Soup powder: +12.4%
- Powdered milk: +12.3%
- Whole chicken: +12.2%
- White sugar: +11.5%
- Flavored milk: +14%
Food and Non-Alcoholic Beverages Inflation
According to the report, annual inflation for food and non-alcoholic beverages rose from 6.3% in April to 6.7% in May 2023.
Persistent Meat Inflation
Since October 2022, meat inflation has consistently risen above 6.0%, peaking at 8.5% in May 2023. Compared to April’s 8.1% increase, the price of fish products increased at a slightly slower 7% rate.
Surging Cooking Oil Prices
Cooking (sunflower) oil prices have increased by 30.3% since May 2022 and 8.5% since April 2023, respectively.In May 2023, the average cost of a 750ml bottle of sunflower oil will be P29.39, up from P20.99 last year.
Broader Oils and Fats Category Inflation
The whole oils and fats category saw inflation in May 2023 at a rate of 20%, up from 16.7% in April, as a result of higher costs for frying oil.
Fuel Prices Remain a Significant Factor
Fuel prices fell somewhat each month in May 2023, while the yearly growth accelerated from 21.4% in April to 37.4% in May.Diesel prices rose by 27% in May compared to the same month the year before, while gasoline prices rose by 41.8%.
Vehicle and Running Costs
The prices of vehicles rose by 6.5%.
The impact of inflation on consumers
Consumers’ purchasing power is diminished by the rising rate of inflation, which is bad news because low-income individuals spend a greater percentage of their income on necessities like food and transportation.Households are expected to curtail other purchases to pay for basic requirements as food prices continue to rise, which will slow economic development.The Botswana government has taken a number of steps to lessen the impact of inflation on the economy, including lowering import taxes on staple foods, enforcing price restrictions on a restricted number of items, and offering subsidies to low-income consumers.Long-term inflationary pressures may not be adequately controlled by these methods, particularly if commodity prices continue to grow globally and the COVID-19 epidemic continues.
The outlook for inflation in Botswana
According to the Bank of Botswana’s forecast, reduced international oil prices and a stable exchange rate will help keep inflation in the target range of 3-6% in the near future.However, there are still dangers to inflation’s upside, such as rising global commodity costs, problems with the supply chain, and COVID-19 pandemic-related ambiguities.As a result, the central bank has continued to pursue an accommodating monetary policy to promote economic expansion and restrain inflation.
The cost of living for households is increasing as a result of inflation, which is a key problem for the Botswana economy due to rising food and fuel prices.While the government and central bank have taken steps to lessen the impact of inflation, ongoing efforts are required to make sure that it stays within the target range and does not negatively impact Batswana’s economic growth and well-being.