End of inflation relief sparks price hike concerns
The imminent end of government’s inflation relief measures is sparking fears amongst consumers that retailers may significantly hike their prices at a time when many households’ incomes are still under pressure, BusinessWeek has established.
The Finance Ministry introduced several temporary relief measures last August as inflation spiralled to 14year highs. The interventions include reducing Value Added Tax (VAT) from 14 to 12% as well as zero-rating cooking oil and Liquid Petroleum Gas.
Major service entities such as those in the banking sector, Botswana Power Corporation, Multichoice and others announced reductions in prices to reflect the VAT reduction, but consumers have complained that most retailers either ignored the measures or even increased prices of goods, including basic commodities.
On Wednesday, Finance Ministry officials said various options are being considered on whether to extend the relief measures, adding that any specific intervention would be announced in the Government Gazette.
“The measures did have an impact and it is estimated that they reduced inflation by approximately 1.2 percent below where it would have been without the interventions,” the officials said.
Inflation peaked at 14.6% in August, but declined to 12.2% in November on the back of a slowdown in fuel prices.
The Consumer Watchdog’s Richard Harriman told BusinessWeek that the measures had had a temporary effect and helped a lot of consumers during the hard times. He urged consumers to be cautious when spending noting that they are not out of the woods yet.
“I hope the Minister can extend these temporary measures because few people could easily cope with another increase in prices,” he said.
“There’s every reason to think commodity prices will continue to increase this year and every measure to help should be welcome.”