Energy prices to push inflation up to double digits

source: Sunday Sundard
by Sunday Standard Reporter
03.02.2008 8:13:47 P

Keith Jefferies, chairman of Botswana Insurance Fund Management’s (Bifm’s) investment committee said the country should brace itself for a double digit inflation rate as a result of power crisis and the high crude oil prices.

Writing on Bifm’s economic review ahead of the budget speech to be delivered on Monday and the upcoming Bank of Botswana’s annual Monetary Policy Statement, Jefferies said Botswana is “much more exposed” to power outages and possible hike in administrative prices, a move which will put strain on the central bank’s inflationary target.

“A new supply contract between South Africa’s Eskom and Botswana Power Corporation (BPC) came into effect on 1 January 2008 and its much less favourable to Botswana than the previous contract, both in terms of prices and stability of supply—the result of which is that Botswana is now much more exposed to both tariff increases and supply disruptions from South Africa than it had been previously,” he said.

“Substantive electricity price increases are likely in 2008, and although electricity costs only have a weight of 1.5 percent in the CPI basket, they feed through widely to other prices and will push up inflation further,” he added.
Botswana, DRC, Namibia, South Africa, Zambia and Zimbabwe are facing a huge problem of power supply due to high [continue reading]



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