In December 2009, annual inflation as measured by the Consumer Price Index (CPI) rose by 0.8 percentage points to 5.8 percent, from 5.0 percent in November. Despite the rise, inflation remains within the Bank of Botswana’s medium term objective range of 3 – 6 percent. The increase was almost entirely due to the continued winding down of favourable base effects in transport costs (arising from fuel price reductions in the second half of 2008), where inflation shifted from a negative 2.3 percent to a positive5.1 percent. Other sectors that also contributed to the increase in inflation were, housing, water and electricity (from 3.3 percent to 3.7 percent) and miscellaneous goods and services (from 4.6 percent to 4.8 percent). This was, however, significantly offset by falling inflation for food and non-alcoholic beverages (from 6.1 percent to 4.7 percent), alcoholic beverages and tobacco (10.1 percent to 9.0 percent), and clothing and footwear (from 8.9 percent to 7.4 percent). Inflation also fell marginally for furnishing, household equipment and routine maintenance (from 10.4 percent to 10.2 percent), recreation and culture (from 6.4 percent to 6.2 percent), health (from 5.5 percent to 5.4 percent), and communication (from -0.3 percent to -0.4 percent).
The trimmed mean measure of core inflation increased by 1.1 percentage points from 5.3 percent in November to 6.4 percent; while, excluding administered prices, inflation fell by 0.7 percentage points from 7.7 percent to 7.0 percent.