Inflation increased to 1.8 percent in September 2020, going up from 1 percent in August in reflection of the upward adjustment in public transport fares from -6.9 to -3.9 percent in September 2020 that increased inflation by approximately 0.64 percent.
The heaviest factor in the latest Consumer Price Index is Transport, which carries 20.65 percent of total weight. It is followed by Food and Non-alcoholic Beverages, which accounts for 16.51 percent. Housing, Water, Electricity, Gas and Other Fuels account for 14.9 percent while Miscellaneous Goods and Services account for 10.55 percent.
However, September inflation still remained below the lower band of Bank of Botswana’s medium-term objective range of 3 – 6 percent and significantly lower than the 3 percent in September 2019.
In June, Botswana recorded the lowest level of inflation since records began in January of 1997, from 2.4 percent in May to 0.9 percent, when a plunge in transport prices (-6.7 percent vs -0.1 percent in May) and a sharp slowdown in costs of Alcoholic Beverages and Tobacco (5.4 percent vs 22.3 percent) were recorded. The headline inflation remained flat in July before going to 1 percent in August.
Rising from 0.9 percent in July to 1 percent in August, the main upward pressure on inflation came from prices of Food & Non-alcoholic Beverages (4.2 percent vs 3.9 percent in July), Housing and Utilities (6.1 percent vs 5.9 percent), and Alcoholic Beverages & Tobacco (6.6 percent, the same pace as in July).
In contrast, costs fell for Transport (-6.9 percent, the same pace as in July) and Recreation & Culture (-0.4 percent vs -0.7 percent).
Apart from transport fare spiking inflation, the September 2020 inflation also reflects an increase in the annual price changes for some categories of goods and services like Housing, Water, Electricity, Gas and Other Fuels (from 6.1 to 6.4 percent), Clothing and Footwear (from 2.3 to2.5 percent), Miscellaneous Goods and Services (from 0.5 to 0.7 percent), Communication (from 0.5 to 0.6percent), and Recreation and Culture (from -0.4 to 0 percent).
However, the upward pressure on inflation was partly offset by inflation decreasing with respect to Alcoholic Beverages and Tobacco (from 6.6 to 6.2 percent) and Furnishing, Household Equipment and Routine Maintenance (from 2.2 to 2 percent). Inflation remained stable for Education (4.7 percent), Food & Non-Alcoholic Beverages (4.2 percent), Restaurants and Hotels (3percent), and Health (1.5 percent).
Similarly, the 16 percent trimmed mean inflation and inflation excluding administered prices increased from1.1 percent and 2.9 percent to 1.8 percent and 3.1 percent, respectively, in the same period.