Pain in the pockets as inflation spirals
Mbongeni Mguni - Phatsimo Kapeng | Monday September 27, 2021 06:00
Economists, like any other sub-sector of specialised interest, have their own jargon or technical terms used to describe various indicators in their field. Outsiders may feel the jargon is used to close them out, but those on the inside use it to more accurately describe trends, indicators, phenomena and others. Often, something gets lost and misinterpretation may occur in simplifying jargon.
When the wave of tax, levy and tariff increases were announced in April this year, economists noted that these would result in inflationary pressures, some in terms of knock-on effects, others in terms of transitory effects. With inflation, or the average increase in the prices of goods and services, having trended at record lows last year, averaging just 1.9 percent, economists expected another technical term, ‘base effects’ to come into play this year.
Inflation is currently trending at nine-year highs due to the various ‘effects’, and this week, the trade minister, Mmusi Kgafela warned that the lifting of the State of Emergency (SoE) next week would fuel further inflation, as price controls on essential goods are removed.
For the average consumer, however, the ‘effects’ are felt in the trolley in the pocket after a trip to the supermarket. The pain in the pocket is felt in how higher electricity prices are removing money from consumers’ pockets. How higher fuel prices, rentals and water tariffs are competing in the pocket for the few available pula amid a stubborn pandemic.
Those attempting to build their own homes will have found the prices of building materials, particularly cement, moving beyond reach. Services such as postage and those accessed from the financial sector, have all also risen significantly this year.
Focussing on the supermarket trolley alone, Statistics Botswana figures show that in the past 12 months, the prices of oils and fats, particularly cooking oil, have risen the most, followed by prices of fish. The prices of bread, different types of fresh meat, coffee and teas as well as milk and related products have all risen significantly as well.
This week, a snap survey by a Mmegi news crew in three major supermarkets that pride themselves on low prices, found that the cheapest two-litre bottle of cooking oil ranges from P45 to P51, while a two-kilogramme of White Star maize meal ranges from P27 to P31. A one-kilogramme packet of brown sugar ranges between P13 and P16, while 26 tagless teabags of Five Roses Smooth Ceylon range between P14 and P16.
Other data shows that a two-litre of cooking oil can go as high as P70, while the two kilogrammes of White Star can fetch as much as P40. One kilogramme of brown sugar can reach P22 and the Five Roses Smooth Ceylon can be beyond P20.
In fact, out of all the food items whose prices are monitored by Statistics Botswana, only vegetables have provided some relief for consumers as their prices have risen by only 1.6 percent in the past 12 months.
The Mmegi news crew spoke to ordinary consumers on how they are coping with the ‘effects’.
Olebogeng Patle
“The whole nation is concerned because of these price increases and it’s very painful to see this happening more especially in this difficult time of COVID-19 and job losses.
“It brings so much pain to us because we also have children who expect us to buy them stuff almost every day.
“Our cooking patterns have also changed as we no longer prepare meals as we used to do.
“Now we have to try and save food so that it can last for a month to avoid spending too much.”
Moeti Morulane
“We were shocked to see these new prices and for us who are not even working, how are we going to survive.
“Imagine the price of a cooking oil going up like that! I mean this shows that the government or whoever is responsible for those new prices don’t even care about Batswana at large.
“They want to destroy our families we are going to die of hunger; that’s what they want I believe.
“We are going to see the crime rate going up because already most people have lost their jobs and where are they going to get money to buy food and other important things?
“This is madness! Those who are working also don’t get salary increases yet the food prices have gone up and they also have other things to spend money on like transport.
“I used to buy combos and I could spend only P200 but now things have changed and I have to spend more on food only.
“I have four children who all look up to me and for sure I have to provide.
“We also have a problem with electricity which is very expensive nowadays.
“We don’t know what wrong we have done as a nation. We understand they are doing business but no, they shouldn’t treat us like that.
“At least they should consider creating more jobs of which they are also failing.”
Stanley Ndaba
“The food prices have gone up such that we can’t afford even simple things like cooking oil. Imagine!
“We are going to die of hunger with our families. You can imagine as head of the family you are expected to bring something to the house more especially for children and now we no longer afford those small things that bring smiles to our little ones.
“We have never come across this kind of situation before and it’s going to make life difficult in every aspect.
“Most Batswana are not working because there are no jobs and others are continuing to lose their jobs because of COVID-19. I see the worst coming.
“Everything has changed. We no longer buy foodstuffs that we used to buy before and yet we are advised to eat healthy by health officials.
“It means even our bodies are going to lack some of the important nutrients, which are needed to keep the body in a healthy condition. Even our eating patterns are forced to change so that we can save food and this is not a good thing for some of us.”
Katlego Ratsheola
“These recent increases in food prices have affected us a lot. Some of us left our parents’ homes coming to the city for school and now we have just finished schooling and it’s time to look for jobs.
“We have been surviving with the school allowance and now it has stopped and we have to find a new way to survive in the city.
“We are expected to pay rentals every month-end despite the fact that we are jobless and now comes another problem of price increase in food.
“We really don’t know what to do now because our parents cannot afford to help us pay rent every month-end and also buy us food at the same time.
“It’s really a huge problem that we are facing now.”
While the Bank of Botswana expects inflation to decline from its current highs and reach between three and six percent before June next year, the recent statement by the trade minister suggests prices may extend even further beyond the reach of consumers in the short term.
Kgafela expects prices to rise significantly from October 1, when the SoE ends. The SoE prohibited producers or suppliers from effecting profit mark-ups on essential products, which included food items. Regulation 25 of the SoE states that where there is an increase in the cost of procurement or production of essential supplies, a trader shall not increase the price of procurement or production of essential supplies by more than the additional cost of procurement or production of such essential supplies.
“Post the State of Emergency, there is a likelihood that prices of basic goods will increase substantially given that in April 2021 there were price increases for VAT, fuel, electricity and Botswana Housing Corporation rentals,” he said, this week.
“Since Botswana is a free market economy and has abolished price control, the market will continue to carry out the following measures to reach the consumers.”
For economists, the end of the SoE will provide more ‘material’ to study the various effects driving inflation into the future. For consumers, the pain in the pocket is expected to worsen.