CBE REVISES INFLATION FORECASTS UPWARDS

MBABANE – The country’s inflation forecasts have been revised upwards for both the short-term and medium term. 

This is as per latest figures from the Central Bank of Eswatini (CBE) .The upward revision is a result of a combination of higher than expected inflation outturn in October 2020 and the upside factors which outweighed the downside domestic and external factors. 

inflation

“Among the upside factors is the expected higher trend in food inflation which is expected to be countered by the projected low Brent crude oil prices arising from slow global economic recovery,” reported CBE. While the relaxation of some lockdown restrictions in the country and opening up of most sectors is expected to exert positive effects on domestic inflation, supply shocks somewhat exist, exerting upward pressure on domestic inflation.

“While the Rand is expected to appreciate throughout the remainder of the year and through to 2021, there is still a minimal pass-through effect to domestic inflation.

“Furthermore, the threat of COVID-19 resurgence in some countries poses as an upside risk to the inflation outlook due to the likelihood of reinstatement of lockdown regulations. However, the impact is likely to be lower than the first wave,” shared CBE. 

Consequently, inflation rate for the fourth quarter of 2020 is expected to be higher at 4.65 per cent than the previous forecast of 4.21 per cent, bringing the annual average forecasts lightly higher to 3.84 per cent from 3.74 per cent. The first quarter of 2021 is also revised up to 4.51 per cent from 4.06 per cent in September 2020 forecast. In the medium-term expected upward adjustments on domestic administered prices, mainly utilities are expected to exert upward pressure on the domestic inflation. Oil prices are expected to increase in 2021 in line with the expected recovery of economies while a projected Rand appreciation in 2021 will relieve inflationary pressures. On the other hand, higher oil prices and Rand depreciation is expected in 2022.Therefore, inflation forecasts for the 2021 have been revised up to 5.23 per cent from 4.34 per cent; and for 2022 is up to5.29 per cent from4.06 per cent.

Post your comment

Your name:

Your e-mail address:

Add your comments:

Please enter the code you see in the image:

Image:

Code: