Africa-Press – Eswatini. The Central Bank of Eswatini (CBE) forecast for the short-term has been revised downwards.
According to the CBE’s inflation forecast for 2024-2026, the downward revision was necessitated by the lower inflationary pressures which are expected to persist more in the short-term.
The CBE noted that food inflation was on a downward trend and continued to cause an overall moderation in domestic inflation. As a result, the overall inflation forecast for the quarter ended December 2023 was lower at 4.67 per cent than the previously forecasted 5.05 per cent. Furthermore, the recent downward adjustment in fuel prices for January 2024 was also expected to exert downward pressure on inflation. On the other hand, upward inflationary pressures are expected from increases in domestic administered prices (utilities) likely to be effected in the second quarter of 2024.
Inflation
It is worth noting that Eswatini’s headline inflation decreased to 4.3 per cent in December from 4.7 per cent. According to the latest Consumer Price Index (CPI) report issued by the Central Statistical Office (CSO), the lower headline inflation was due to decreasing annual rates of change reflected in December in the price indices. The price indices that dropped include food and non-alcoholic beverages, which decreased from 8.4 per cent in November 2023, to 7.1 per cent in December 2023. It was reported that fish and seafood, bread and cereals, sugar, jam, honey, chocolate and confectionery mainly contributed to the lower index in this category.
The report further indicated that another price index that dropped was for transport, which decreased from 0.0 per cent in November 2023, to -0.5 per cent in December 2023. Airfares, fuels and lubricants; and spare parts and accessories, mainly contributed to the lower index in this category. Another contributing factor was for furnishing, household equipment and routine household maintenance, which decreased from 4.1 per cent in November 2023 to 3.9 per cent in December 2023. Household textiles, small electric household appliances and small tools and accessories mainly contributed to the lower index in this category.
Pressure
Meanwhile, regionally downward pressures are expected from lower South African inflation forecasts, especially in the short-term. The expected lower inflation in South Africa mainly transmits via import of finished goods and is therefore expected to influence overall Eswatini inflation to the downside. Globally, lower inflationary pressures are expected to come from the slowdown in global oil prices which are forecasted to be lower than previously expected. While Lilangeni/US Dollar exchange rate closed at E18.53 in December 2023, it is expected to slightly appreciate in 2024 and pose downward pressure on domestic inflation. Consequently, the annual average inflation forecast for 2024 is revised down to 4.91 per cent (from 5.17 per cent). The first quarter of 2024 is revised down to 4.70 per cent (from 5.01 per cent).
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