CBE raises average inflation to 4.2%

MBABANE – The Central Bank of Eswatini (CBE) has increased the annual average inflation forecast for 2022 to 4.20 per cent.

This is a slight increase from the 4.03 per cent that was forecasted in January 2022. CBE Governor Majozi Sithole announced this during his Annual Monetary Policy Statement made through a webinar yesterday. Sithole said the inflation rate for the first quarter of 2022 was revised down to 3.50 per cent, from 3.60 per cent, while the second quarter of 2022 is up to 4.28 per cent (from 4.02 per cent) and the third quarter of 2022 is up to 4.47 per cent (from 4.26 per cent).

He said the increase in inflation was informed by the Brent Crude Oil, which later affected the price of fuel as well as geopolitical developments. “In the medium term, 2023 is forecasted to be higher than previously anticipated while 2024 remains unchanged. In this period, the Rand is expected to remain stronger, exerting downward pressure on inflation. Increases in domestic administered prices pose as an upside risk. However, Brent Crude Oil prices are expected to stabilise and increase at a slower pace, somewhat reducing some of the inflationary pressures,” the governor said.

Inflation for 2023 is forecasted at 4.05 per cent (from 3.88 per cent) and 2024 remains unchanged at 4.20 per cent. “Inflation forecasts have been revised upwards for the year 2022 and 2023, while remaining unchanged for 2024. The uptick in the short-term is in line with persistent inflationary pressures which largely emanate from global geopolitical and economic developments. These pressures have generally seen Brent Crude Oil prices surge higher than previously anticipated,” the governor said.

Sithole said finished goods sourced from SA were expected to exert further pressure on the inflation. “The recent increase in domestic fuel prices, which are a result of the increase in global oil, are expected to persist and exert upward pressure on domestic inflation forecasts. Furthermore, these global developments have also seen higher fuel price adjustments in SA. As a result finished goods and services sourced from SA are expected to exert further inflationary pressures,” he said.

The governor said the growth rate for CPI for services has remained muted at 0.1 per cent while the CPI for goods averaged 5.8 per cent in the first quarter. The CBE at its policy meeting in March 2022, decided to leave the interest rate on the main refinancing operations unchanged at zero per cent.

Furthermore, the interest rate on the marginal lending facility and the deposit facility was also left unchanged at 0.25 per cent and -0.50 per cent respectively.