In June, annual inflation as measured by the Consumer Price Index (CPI) declined by a further 1.4 percentage points to 7.0 percent, from 8.4 percent in May. This was despite monthly inflation accelerating from 0.3 percent to 1.4 percent over the same period, mainly due to higher fuel prices, and reflects the continuing dissipation of the effects of rapidly rising prices in mid-2008. There were significant downward movements in inflation for the food and non-alcoholic beverages (from 18.0 percent to 15.3 percent), clothing and footwear (from 8.1 percent to 7.3 percent), housing, electricity and water (4.1 percent to 2.9 percent) and transport (from -12.8 percent to -14.7 percent). In most other categories, inflation either declined marginally or remained unchanged. However, increases occurred in recreation and culture (from 4.3 percent to 4.5 percent), restaurants and hotels (from 20.1 percent to 21.3 percent), and miscellaneous goods and services (from 2.6 percent to 3.6 percent).
The trimmed mean measure of core inflation was 7.5 percent in June, a fall of 1.2 percentage points from 8.7 percent in May. Excluding administered prices, inflation dropped by 0.7 percentage point from 14.5 percent to 13.8 percent. Headline inflation is still above the Bank of Botswana’s inflation objective range of 3-6 percent, but it is expected to maintain a downward trend in the coming months, despite upside risks from higher international fuel prices and possible increases to domestic administered prices.