Consumers in Botswana can breathe a sigh of relief as forecasts point to a potential easing of food prices in the third quarter of 2025. The Bank of Botswana (BoB), in its latest Monetary Policy Report, suggests that increased food supplies from commercial farms across Southern Africa could drive this welcome change.
The projected harvest is expected to alleviate some of the pressure on the region’s food supply, leading to a decrease in prices. The Monetary Policy Report, which reviews macroeconomic performance and assesses factors influencing inflation, notes that, “In Southern Africa, food prices are expected to decrease as the impact of drought conditions caused by the El Nino weather phenomenon begin to subside. Furthermore, recent heavy rainfall in the region suggests that the 2024/25 season could be favorable, provided there are no severe floods that could negatively impact crop production.”
However, the report also cautions that maize prices, a staple in Southern Africa, remain high, with several countries experiencing record prices at the start of 2025. According to the Bank, “Upward pressure on prices is expected to persist at least until the second quarter of 2025, when the main harvest is anticipated to partly alleviate supply constraints.” These elevated prices are largely attributed to constrained domestic supplies following the El Niño-induced drought of 2024.
Looking ahead, the BoB anticipates that lower regional and international food prices could exert downward pressure on inflation within Botswana in the short term. “Global food prices are expected to trend downwards in the short-to-medium term. The anticipated decline in international food prices is underpinned by the expected decline in international oil prices, an input in food production. Overall, this factor suggests potential downward pressure on domestic inflation from international food prices.”
The report further suggests that international oil prices are also projected to decrease in the short-to-medium term, driven by an expected increase in supply and a more subdued demand outlook. While oil prices saw an increase in the first quarter of 2025 due to production cuts by OPEC and its allies, as well as US sanctions on Russia and threats against Iran, these factors are expected to be offset by the broader market dynamics.
Subdued domestic and global economic activity, coupled with lower inflation among Botswana’s trading partners, also contribute to the projected lower inflation in the country. At the April 2025 meeting, the Bank of Botswana Monetary Policy Committee (MPC), under the leadership of Governor Cornelius Dekop, projected that the economy would “continue to operate below full capacity in the short term and improve slightly in the medium term, thus not generating demand-driven inflationary pressures.” The MPC also noted that South Africa, a major trading partner, is forecasted to see inflation average 3.6 percent in 2025 and 4.5 percent in 2026, which are slightly lower than previous projections.
Headline inflation in Botswana averaged 2.6 percent in the first quarter of 2025, a decrease from 3.6 percent in the same period of 2024. The BoB attributes this to a deceleration in the rate of annual price changes across most categories of goods and services, driven by subdued domestic demand amid the ongoing recession.
Looking forward, inflation is expected to revert to the objective range of 3-6 percent from the fourth quarter of 2025. According to the BoB, “The projection takes into account the base effects associated with the adjustment of administered prices in 2024, the reduction in water tariffs effective April 2025, revision of the Pula currency basket weights to 50 percent for the South African rand and 50 percent for the Special Drawing Rights (SDR), maintenance of a downward rate of crawl of 1.51 percent for 2025, the projected appreciation of the Pula against the South African rand, trading partner countries’ inflation forecasts and developments in international commodity prices (food and oil).”
