Rising inflation deflates disposable income

As predicted by both analysts and authorities, the country’s inflation has accelerated on account of transport, housing, food and other miscellaneous price changes.

Statistics Botswana’s latest report indicated that annual inflation rate soared to 5.6 percent in April 2021, recording a rise of 2.4 percentage points on the March 2021 rate of 3.2 percent. The rise is largely in line with expectations given the increase in fuel prices, VAT and other administered prices. Disposable income will come under pressure once more,” said Motswedi Securities Analyst, Garry Juma.

Despite the increase in inflation, the Bank of Botswana has promised to keep the bank rate unchanged over the next twelve months to support economic growth. Meanwhile, SB says the transport group index registered an increase of 5.9 percent, from 102.8 in March to 108.8 in April. The data authority says the development is attributed to an increase in the constituent section index of operation of personal transport and purchase of vehicles by 9.3 and 5.0 percent respectively.

In addition, the rise to 5.6 percent in inflation rate, moves the annual inflation rate to the upper end of the reserve bank’s medium-term range of three to six percent, reducing disposable income and depressing real consumer spending. Statistics indicate that the annual inflation rate has recorded a steady rise since the beginning of the year.