Headline inflation increased significantly from 3.2 percent in March to 5.6 percent in April 2021, moving closer to the upper bound of the Bank’s medium-term objective range of 3 - 6 percent, and higher than the 2.5 percent in April 2020. The increase in inflation between March and April 2021 mainly reflects the increase in value added tax (VAT) from 12 percent to 14 percent; an additional P1 per litre fuel levy; upward adjustment in electricity tariffs by 3 percent; the increase in Botswana Housing Corporation (BHC) rentals; the introduction of sugar tax and the rise in subscription fees by Multichoice Botswana, estimated to have added approximately 2.14 percentage points, 1.15 percentage points, 0.17 percentage points, 0.2 percentage points, 0.02 percentage points and 0.01 percentage points, respectively. The rise in inflation also reflects the increase in the annual price changes for, almost all, categories of goods and services in the same period: Transport (from 1.4 to 7.4 percent); Alcoholic Beverages and Tobacco (from 7.1 to 11.7 percent); Miscellaneous Goods and Services (from 1.4 to 5.8 percent); Food & Non-Alcoholic Beverages (from 4 to 6.8 percent); Recreation and Culture (from 1.7 to 3.3 percent); Furnishing, Household Equipment and Routine Maintenance (from 2 to 3.1 percent); Restaurants and Hotels (from 1.7 to 2.5); Clothing and Footwear (from 2.8 to 3.5 percent); Communication (from 0.8 to 1.5 percent); Health (from 2.3 to 2.8 percent); and Education (from 1.7 to 1.8 percent). However, the upward pressure on inflation was marginally offset by inflation falling with respect to Housing, Water, Electricity, Gas and Other Fuels (from 7.2 to 6.4 percent).
The 16 percent trimmed mean inflation and inflation excluding administered prices increased from 2.8 percent and 3.9 percent to 5.4 percent and 6.1 percent, respectively, in the same period.