Africa-Press – Eswatini. – Headline inflation rate has continued to fall for the fifth consecutive month to reach 3.5 per cent in September 2023 but prices continued to increase.
According to the consumer price index (CPI) report for September 2023, headline inflation rate in September 2023 (i.e. the annual percentage change in the CPI in September 2023 compared with that of September 2022) for the country is 3.5 per cent. The report is issued by the Central Statistical Office (CSO) in the Ministry of Economic Planning and Development. The report indicated that this annual rate was 0.5 percentage points lower than the corresponding annual rate of 4.0 per cent observed in August 2023. It was reported that the month on month inflation rate (ie. the percentage change in the CPI in September 2023 compared with that of August 2023) is 0.4 per cent.
When reached for further comment, CSO’s Price Statistician Bongumenzi Zwane explained that the decline in inflation rate did not mean that the prices were declining as well. He said despite the decline in inflation, prices continued to increase but in a slower rate. Zwane stated that it was important to distinguish between inflation rates versus prices, as these two were different things and behaved in a different way. He said as long as the inflation rate remained positive, prices would increase.
Negative
He said the only time prices would decline would be when the inflation rate would be negative. The economist stated that there was nothing much to celebrate with the inflation rate declining because prices continued to go up while salaries remained the same. He said prices continued to hit hard on consumers’ disposable income despite the drop in the headline inflation rate. He stated that the continued global economic shocks contributed to the ever increasing prices and that included the increasing fuel prices among many other factors. The lower headline inflation was reportedly due to decreasing annual rates of change reflected in September in the price indices for; clothing and footwear, which decreased from 6.0 per cent in August 2023 to 4.5 per cent in September 2023, garments and footwear, mainly contributed to the lower index in this category.
It was reported that transport, decreased from -2.7 per cent in August 2023 to -3.5 per cent in September 2023. Motor vehicles contributed to the lower index in this category. It was further highlighted that recreation and culture, which decreased from 3.6 per cent in August 2023 to 2.8 per cent in September 2023, equipment for the reception, recording and production of sound and pictures; and magazines mainly contributed to the lower index in this category. The CSO also reported that food and non-alcoholic beverages decreased from 10.7 per cent in August 2023 to 9.9 per cent in September 2023. Sugar, jam, honey, chocolate and confectionery, coffee, tea and cocoa; and bread and cereals contributed to the lower index in this category.
Growth
However, the decreasing rates were counteracted by increasing rates of growth in the price indices for; restaurants and hotels, which increased from 0.5 per cent in August 2023 to 0.8 per cent in September 2023. “Restaurants and cafés, mainly contributed to the higher index,” read the report in part. Meanwhile, when presenting his recent monitory policy statement, the Central Bank of Eswatini (CBE) Governor Dr Phil Mnisi said the CBE expects the cost of goods and services to increase moderately in 2023. He said the CBE revised down its inflation forecasts for 2023 to 4.93 per cent (from 5.55 per cent). He noted that the bank revised down its inflation forecast to 4.93 per cent for 2023 and 4.68 per cent for 2024, risks to the inflation outlook for Eswatini continue to include supply chain disruptions, oil prices uncertainty and the possibility of drier weather conditions which would affect food production.
Mnisi said tighter monetary policy conditions continue to weigh down on global growth prospects. He said advanced economies were forecasted to grow by 1.5 per cent in 2023 and 1.4 per cent in 2024 while Emerging Markets and Developing Economies are expected to grow by 4.0 per cent in 2023 and 4.1 per cent in 2024. The governor added that global inflation was forecasted lower at 6.8 per cent (from seven per cent) for 2023 while the forecast for 2024 was marginally revised up to 5.2 per cent (from 4.9 per cent). He said risks to the outlook remained elevated and persistent. “They include the possibility of the expected El Nino drought and the Russia Ukraine war which could intensify, further raising food and fuel prices,” said the governor. The governor said the bank would continue to monitor international and domestic developments that influence the movements of inflation and will act appropriately in line with its mission to foster price and financial stability that is conducive to the economic development in Eswatini.
Pressures
Meanwhile, the International Monetary Fund lifted its global inflation forecast for next year and called for central banks to keep policy tight until there’s a durable easing in price pressures. The IMF boosted its projection for the pace of consumer price increases across the world to 5.8 per cent for next year in its World Economic Outlook released Tuesday, up from 5.2 per cent seen three months ago. The call for vigilance on inflation comes as it also trimmed the forecast for economic growth in 2024.
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