GABORONE, (CAJ News) – Botswana’s inflation rate has risen to its highest levels in almost eight years, following the impact of increases in value – added tax (VAT), electricity tariffs and fuel levy as well as the introduction of a sugar tax.
Inflation rose to 5.6% year-on-year in April, compared to 3.2% y/y in March – the highest inflation level recorded since August 2013.
“This sharp rise follows the implementation of several supply-side changes,” explained Gomolemo Kabelo Basele, Quantitative Analyst, First National Bank (FNB) of Botswana.
VAT was increased from 12% to 14%.
There was a 3% increase in electricity tariffs and a P1 (US$0,093) increase in the fuel levy on April 1.
“The increase in VAT saw price growth accelerate across a host of group indices,” Basele said.
FNB has maintained its forecast for headline inflation to average 3.9 percent in 2021.
“However, upside risks to this outlook are now more pronounced,” Basele said.
The analyst based this sentiment on the Water Utilities Corporation indicating that water tariffs were due to receive an upward revision in June 2021. There is also the possibility of further fuel price increases, depending on international oil price movements.