Botswana Inflation Eases to 7.8% as Fuel and Electricity Costs Sustain Price Pressures

Botswana Inflation Eases to 7.8% as Fuel and Electricity Costs Sustain Price Pressures. Botswana’s annual inflation rate declined to 7.8% in September 2026, from 9.3% in August, but remained above the Bank of Botswana’s medium-term objective range of 3% to 6%.

Bank of Botswana Governor Lesego Moseki said the Monetary Policy Committee (MPC) expects inflation to remain above the target range in the near term, citing persistent domestic cost pressures and uncertainty in the global economy.

The September decline was largely attributed to base effects following an increase in domestic fuel prices on 15 September 2025, which had added 0.93 percentage points to inflation.

Despite the moderation, the central bank projects average inflation of 8.1% in 2026 before easing to 5.4% in 2027.

The inflation outlook remains tilted towards the upside, with the MPC warning that high fuel prices and electricity tariffs could generate further price increases. Additional fuel price adjustments could also raise transportation and business operating costs, placing pressure on consumer prices.

International developments are adding to these risks. The conflict in the Middle East has contributed to higher global prices for oil, gas, fertilisers and industrial inputs, while trade tensions and supply chain disruptions could increase the cost of imported goods and production materials.

Climate risks, including the anticipated effects of El Niño, could also affect agricultural output and food prices through below-normal rainfall, droughts and heatwaves.

Against this backdrop, the MPC maintained the Monetary Policy Rate at 5.5%. The Standing Deposit Facility and Standing Credit Facility rates were also unchanged at 4.5% and 6.5%, respectively.

The committee noted that domestic liquidity has improved since the final quarter of 2025, supported by increased government funding and spending, higher diamond receipts and changes to monetary policy operations.

It also lifted the moratorium on commercial banks’ primary reserve requirements.

Although lower international commodity prices and subdued economic activity could result in lower-than-projected inflation, the central bank said continued vigilance would be necessary to bring inflation back within its target range.