INFLATION TICKS UP FOR SECOND CONSECUTIVE MONTH

MBABANE – Eswatini’s inflation rate has continued its upward trend for the second consecutive month, rising to 4.1 per cent in January 2025 from 3.9 per cent in December 2024. This marks a 0.27 percentage point increase, indicating growing price pressures in the economy. According to the latest Consumer Price Index (CPI) report released by the Central Statistical Office (CSO), the January inflation rate, although higher than December’s, remains lower than the 4.5 per cent recorded in January 2024. The rise in the inflation rate from 3.9 to 4.1 per cent means that prices are increasing at a faster pace.

While this may seem like a small increase, it can have significant cumulative effects over time, particularly for low-income households that spend a large portion of their earnings on basic necessities. The report shows that the increase was driven mainly by higher prices in alcoholic beverages, tobacco and narcotics, which surged from 3.5 per cent in January 2024 to 11.2 per cent in January 2025. Additionally, the cost of education also saw a notable rise, increasing by 4.6 per cent month-on-month, primarily due to higher fees in primary and secondary education. Inflation refers to the rate at which the general level of prices for goods and services rises over time, eroding the purchasing power of money.

Money

When inflation is high, consumers find that their money buys fewer goods and services than before. Inflation is usually measured as an annual percentage increase in the Consumer Price Index (CPI), which tracks the prices of a selected basket of goods and services over time. Inflation can be influenced by various factors, including supply and demand dynamics, changes in production costs, exchange rate fluctuations, and government policies.

In Eswatini’s case, the current increase in inflation is partly attributed to external factors such as the impact of El Niño-induced drought, which has led to food shortages, as well as global economic trends affecting fuel and commodity prices. Disposable income is the amount of money households have left after paying taxes and essential expenses. Inflation reduces the purchasing power of disposable income, meaning that consumers can afford fewer goods and services with the same amount of money.

For example, if the cost of food, transportation and utilities rises but wages remain stagnant, households may struggle to maintain their standard of living. This situation forces consumers to either cut back on non-essential spending or dip into their savings, which can slow down economic growth. On a month-on-month basis, inflation accelerated sharply from 0.1% in December 2024 to 0.5 per cent in January 2025. This indicates that prices rose more rapidly within a short period.

The increase was driven mainly by rising education costs and a 4.0 per cent uptick in prices under the miscellaneous goods and services category, mainly due to increased insurance costs.
However, there was some relief in the hospitality sector, where prices in the restaurants and hotels category dropped by 7.8 per cent, primarily due to lower accommodation costs.
It is worth noting that recently, the Central Bank of Eswatini revised its inflation outlook upward, citing risks associated with rising food prices due to the ongoing El Niño-induced drought and external economic pressures.

Post your comment

Your name:

Your e-mail address:

Add your comments:

Please enter the code you see in the image:

Image:

Code: