Food prices expected to rise significantly
Prices of food commodities in the Southern Africa region, including Botswana, are expected to rise significantly this year.
In its April Monetary Policy Statement, Bank of Botswana (BoB) predicts food prices will increase on account of lower-than-expected crop production for the 2018/19 ploughing season.
This is a result of below average seasonal rains that impeded planting, spillover effects from international commodities market as well as recent concerns about El Nino and Cyclone Idai’s impact on the 2019 harvest.
“Overall, there is potential modest upward pressure from food prices on domestic inflation,” warned the central bank.
Already there has been a noticeable change in food prices locally, a development which has seen consumers airing their concerns.
In addition, the Ministry of Agricultural Production and Food Security has already issued a warning concerning the impending drought.
Recently, Minister Patrick Ralotsia told the media it is anticipated that crop failure this year will be over 50 percent.
Ralotsia further revealed he expects the President to declare the 2018/19 season a drought.
Moreover, the situation will be made worse by the fact that two of the country’s main producers of crops, Pandamatenga and Mosisedi, have planted far less this year compared to the previous year.
Elsewhere, subsistence farmers have suffered greatly, witnessing their crops decimated by the ravaging heat and poor, almost non-existent rainfall during the course of the ploughing season.
Meanwhile, even though the central bank predicts inflation to remain within its 3 – 6 percent medium-term objective range in the short-to-medium term, it is still projected to rise slightly.
This is said to be a reflection of increasing prices of alcoholic beverages in the second quarter of 2019 and the upward revision of international food and oil price forecasts.
The central bank further anticipates that additional pressures on short-term inflation outlook, although not substantial, emanate from the expected improvement in domestic economic activity, driven to some extent by the recent increase in public service salaries.