Inflation drops marginally
Isaac Pinielo | Tuesday June 16, 2015 14:13
This means prices increased by a slower rate last month, when compared to the same period last year.
Speaking at the presentation of the release yesterday, Acting Principal Statistician, Phaladi Labobedi stated that the national inflation rate for May was lower than the 4.5 percent recorded during the same month in 2014.
Labobedi also noted that the continued drop in the inflation rate is mainly because of the slow movement of prices in the main component of transport group, which dropped by 5.6 percentage points.
“It should be noted that decreases in fuel prices have an impact on the CPI basket. The last decrease in fuel prices occurred on 14 February 2015. This has helped to suppress the overall inflation rate,” he said. In May, the domestic tradable inflation rate was 3.2 percent while the imported tradable inflation rate was 0.8 percent.
Analysed by region, the inflation rates for urban and rural villages were 2.8 percent and 3.6 percent in May 2015 compared to 4.6 percent and 5.2 percent respectively realised in the same month in 2014.
The annualised inflation rate for cities and towns recorded 3.0 percent in May 2015 as opposed to 4.2 percent in May 2014.
The annual inflation remains within the Bank of Botswana’s (BoB) medium-term objective range of 3-6 percent.
Last week, a meeting of the Monetary Policy Committee (MPC) concluded that the medium-term outlook for price stability remains positive, with the forecast remaining within the 3-6 percent medium-term objective range.
The country’s gross domestic product (GDP) growth is estimated at 4.4 percent in 2014, thus reflecting the 4.5 percent and 4.4 percent expansion in mining and non-mining output, respectively.
Inflation increased from 2.8 percent in March, to 3.1 percent in April 2015, following the upward adjustment in electricity and water tariffs.
The Central Bank indicated that modest domestic demand pressures and benign foreign price developments contribute to the positive inflation outlook in the medium term.
This is subject to downside risks associated with weak global economic activity and subdued commodity prices. However, the shortfall in regional food production is said to present an upside risk to inflation.
BoB said the inflation outlook could be adversely affected by any unanticipated increase beyond the current forecasts for administered prices, government levies and international oil prices. The MPC decided to maintain the bank rate at 6.5 percent.