Regional inflation rates fairly stable

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Southern Times Writer

Harare - The month-on-month and year on year inflation rates in the countries of Southern Africa have been steady.

Botswana maintained the same rate while others witnessed slight increases. Analysts attribute the stability to the decision by most monetary authorities to cut their interest rates.

According to the latest data from Statistics Botswana, headline inflation remained unchanged at 2.9 percent in August 2019 as in July 2019. The constant inflation in August 2019 reflects stable prices for most categories of goods and services (housing, water, electricity, gas and other fuels (1.8 percent); health (1.1 percent); communication (0 percent); recreation and culture (0.1 percent); education (3.2 percent); and miscellaneous goods and services (5 percent).

However, there were partially offsetting movements, with inflation increasing with respect to food and non-alcoholic beverages (from 1.6 to 2 percent); clothing and footwear (from 0.9 to 1.2 percent); transport (from 6 to 6.2 percent); and restaurants and hotels (from 2.2 to 2.3 percent), and falling with respect to alcoholic beverages and tobacco (from 3.6 to 3.5 percent) and furnishing, household equipment and routine maintenance (from 2.3 to 2.2 percent.

Namibia's consumer price inflation edged up to 3.7 percent year-on-year in August 2019 from 3.6 percent in the previous month, with upward pressure coming from food and non-alcoholic beverages (4.1 percent vs 3.4 percent); alcoholic beverages and tobacco (3.9 percent vs 3.5 percent); and furnishing and household equipment (3 percent vs 1.8 percent).

Meanwhile, inflation was unchanged for miscellaneous goods and services (at 2.3 percent) and slowed for housing and utilities (1.9 percent vs 2.2 percent) and transport (6.1 percent vs 6.9 percent). On a monthly basis, consumer prices increased 0.1 percent, after a 0.2 percent gain in July.

Zambia's annual inflation rate also soared to 9.3 percent in August 2019 from 8.8 percent in the previous month. According to Trading Economics, this is the highest inflation rate since October 2016, mainly due rising food prices (10.3 percent vs 9.3 percent in July), amid the worst drought in almost four decades.

In this regard, Agriculture Minister Michael Katambo announced on 25 August the introduction of a cap on the price of maize to keep the staple food affordable, after prices reached a record high this year. This sparked farmers’ protests accusing the government of bringing back price controls. On the other hand, inflation remained steady for non-food items (at 8.3 percent). Month-on-month, consumer prices inched up 0.7 percent, after a 0.5 percent gain in the prior month.

South Africa has a slightly different story, in the month of July the annual inflation rate in South Africa fell to 4.0 percent from 4.5 percent in June, well below market expectations of 4.4 percent and the mid-point of the Reserve Bank's target range of 3-6 percent. This is the lowest inflation rate since January, amid a decrease in fuels cost.
“Fuel prices edged lower in July, bringing some relief to motorists. This dragged annual transport inflation down to 3,0 percent from 5,5 percent recorded in June, which mainly explains the drop to 4,0 percent in the CPI headline rate.

“The price per litre of inland 95-octane petrol was R15,81 in July 2019. In July 2018, motorists were paying R16,02 per litre. The fuel price index dropped by 5,1 percent month-on-month, and fuel prices overall were 0,5 percent lower than they were a year ago,” report Stats South Africa.

According to Stats South Africa, most municipalities increase their tariffs annually with effect from July. Household utility payments, which include municipal rates, electricity and water bills, contribute 6,9 percent of total household spending in South Africa’s CPI. Electricity tariffs increased by 10,5 percent in July 2019, higher than last year’s increase of 6,8 percent.

Water tariffs rose by 10,3 percent, slightly lower than the 11,8 percent rise recorded in 2018. Municipal rates were up by 6,3 percent, lower than 2018’s 14,8 percent. Annual food and non-alcoholic beverage inflation was 3,4 percent in July, down from June’s 3,7 percent.  Prices for bread and cereal products continued to climb, registering an annual rise of 7,9 percent. This was slightly higher than June’s 7,3 percent.

Zimbabwe's month-on-month inflation rate dropped to 18.07 percent in August 2019 from 21.04 percent in July, as prices slowed for food and non-alcoholic beverages (18.6 percent vs 19.9 percent in July) and miscellaneous goods and services (18.8 percent vs 39.8 percent).

In contrast, cost continued to advance for housing and utilities (13.7 percent vs 9.1 percent), amid an increase in electricity tariffs to support the power utility company Zesa Holdings and reduce rolling blackouts in the country. Also, inflation was higher for transport (32.6 percent vs 26.4 percent), as prices of petrol and diesel were hiked four times during the month.

The government has suspended the publication of year-on-year inflation figures until February 2020 following the adoption of a new currency.

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