- Sharp decline in Transport costs offset rises in other sectors like Food and Beverages
TLOTLO KEBINAKGABO
Botswana’s annual inflation rate fell to 1.5 percent in September 2024, marking a significant decrease of 2.4 percentage points from August’s 3.9 percent.
According to a report by Statistics Botswana titled Consumer Price Index of September 2024, the drop was driven primarily by a sharp decline in transport costs, which offset rises in other sectors like food and beverages.
The CPI reflects the average change in prices paid by consumers for goods and services over time.
Across regions
“The primary contributors to the annual inflation in September were the Miscellaneous Goods and Services and Food and Non-Alcoholic Beverages indices, each contributing 0.7 of a percentage point,” the report notes.
However, the standout factor was the Transport group, which recorded a negative contribution of 0.8 percentage points, playing a pivotal role in reducing the overall inflation rate.
Inflation trends varied across Botswana’s different regions. Rural Villages experienced the steepest drop, with inflation falling by 2.9 percentage points – from 4.6 percent in August to 1.7 percent in September.
National CPI
Urban Villages followed closely, witnessing a decline from 3.8 percent to 1.4 percent, while Cities & Towns saw a reduction from 3.7 percent to 1.5 percent.
This fall in inflation mirrored a decrease in the national Consumer Price Index (CPI), which dropped by 0.7 percent between August and September, moving from 134.8 to 133.9.
“The index for Cities and Towns fell from 134.7 in August to 133.8 in September, while the Urban Villages index decreased from 134.9 to 134.0. The Rural Villages index dropped similarly, from 135.0 to 134.0,” says the report.
Relatively uniform drops
These reductions indicate that the decline in inflation was felt across all regions of the country, with relatively uniform drops in CPI. The report highlights that most group indices remained stable, with changes under 1 percent between August and September.
The notable exception was the Transport group, which saw a significant 3 percent decline. In numerical terms, the Transport group’s index dropped from 154.5 in August to 150.0 in September.
The fall in the Transport index was largely attributed to a decrease in the “Operation of Personal Transport” section, which experienced a sharp 5.3 percent decline.
Lower retail pump prices
This was driven by lower retail pump prices for diesel (50ppm) and petrol (95), which decreased by P0.95 and P1.07 per litre, respectively, on 11 September 2024.
While transport costs saw a significant decline, other sectors recorded slight increases. The Alcoholic Beverages & Tobacco index rose by 0.5 percent, climbing from 138.0 in August to 138.8 in September.
This increase was attributed to a 0.6 percent rise in alcoholic beverages prices and a 0.4 percent increase in tobacco prices.
Essential food items
Similarly, the Food and Non-Alcoholic Beverages index increased by 0.3 percent, driven by price hikes in essential food items.
“This growth was largely due to the rise in the section indices for Vegetables (1.3 percent), Fish (Fresh, Chilled & Frozen) (1.2 percent), and Coffee, Tea & Cocoa (1.1 percent),”the report stated.
A closer examination of tradeables and non-tradeables revealed additional insights. The All-Tradeables index, which measures goods that are tradable internationally, dropped by 1.2 percent, moving from 141.6 in August to 139.9 in September.
All-Tradeables down
Imported Tradeables, in particular, saw a steep 1.6 percent decline, while domestic tradeables recorded a modest 0.2 percent increase. Non-Tradeables, or Goods and Services That Are Not Traded Internationally, remained unchanged at 125.7.
“The All-Tradeables inflation rate was 0.9 percent in September 2024, down by 4 percentage points from the August rate of 4.9 percent ,” the report states.
Imported Tradeables registered an even sharper decline, falling to -0.2 percent from 5.2 percent in August, reflecting decreased costs for imported goods.
Locally produced goods
In contrast, Domestic Tradeables inflation rose slightly, from 4.1 percent in August to 4.3 percent in September, driven by higher prices for locally produced goods.
Non-tradeables inflation, which includes rent, education, and healthcare, showed a slight dip of 0.1 percentage points, moving from 2.5 percent in August to 2.4 percent in September.
Overall, the substantial reduction in transport costs played a decisive role in easing Botswana’s inflationary pressures in September, bringing the annual inflation rate down to its lowest level in recent months.
However, small increases in other sectors, particularly Food and Beverages, indicate that price pressures are not evenly distributed across the economy.