The October annual inflation rate stood at 8.8 percent owing to the upward pressure which came from prices of Transport (19.3 percent vs 17.5 percent in September), Alcoholic Beverages & Tobacco (8.8 percent vs 9 percent), Housing & Utilities (8.2 percent vs 8.3 percent), Miscellaneous Goods & Services (7.4 percent vs 7.3 percent) and Food & Non-Alcoholic Beverages (6.8 percent vs 6.4 percent). On a monthly basis, consumer prices increased by 0.9 percent, the biggest increase in six months, following a 0.5 percent rise in the prior month.
As shown by these figures, Transport remained the major contributor of the increase as it is the most important category in the Consumer Price Index (CPI) with 20.65 percent of total weight. CPI measures changes in the prices paid by consumers for a basket of goods and services. Statistics show that in Botswana, CPI increased to 113.30 points in October from 112.30 points in September of 2021, owing to the annual inflation rate taking an upward swing.
The rising inflation is especially taking a toll on lower-income families as the Rural Villages’ inflation rate has shown a rise of 0.6 percent from 8.0 percent in September 2021 to 8.6 percent in October 2021. The Urban Villages’ inflation rate was 9.0 percent in October compared to the September rate of 8.6 percent, while the Cities & Towns inflation rate rose by 0.3 of a percentage point, from 8.4 percent in September to 8.7 percent in October. Price increases that in the very short run put a lot of pressure on family budgets across the board will cause more stress and damage for low-income households as they have less scope and resources to absorb it.
The group indices were generally moving at a steady pace between September and October 2021, recording changes of less than 1.0 percent, except the Transport group index which recorded 3.0 percent from 114.0 in September to 117.5 in October. This was attributed to a growth in the constituent section index of Operation of Personal Transport (5.2 percent) and Purchase of Vehicles (1.2 percent). The increase in the Operation of Personal Transport section index was attributed to the rise in retail pump prices for petrol (95) by P0.71 and diesel (50ppm) by P0.55 per litre, which effected on 8 October 2021.
Given the fact that the Transport index is the one with a major effect on CPI, it may be prudent for policymakers to come up with ways to manage its constituents. As the festive season approaches, many people will be travelling and/or spending more. This could put even more pressure on the CPI and consequently the inflation rate. Controlling the fuel price will go a long way in managing the inflation rate.
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