The latest Consumer Price Index (CPI) data revealed that Botswana’s annual inflation rate climbed to 2.7% in February 2025, marking a modest increase from January’s 2.5%. This uptick was primarily driven by escalating prices in food, beverages, and miscellaneous goods and services, which encompass insurance and financial services.
Significantly, the food and non-alcoholic beverages category, along with miscellaneous goods and services, were the foremost contributors to the annual inflation rate in February 2025, accounting for 0.8 and 0.7 percentage points respectively. Alcoholic beverages and tobacco added a further 0.3 percentage points, while clothing and footwear, as well as housing, water, electricity, gas, and other fuels, each contributed 0.2 percentage points to the inflation rate. Furnishings, household equipment, routine maintenance, health, recreation and culture, education, and restaurants and hotels each contributed 0.1 percentage points. Conversely, the transport and communication sectors exerted a downward influence on the overall inflation rate.
The index highlighted that the upward trend within the food and non-alcoholic beverages group was chiefly propelled by increases in specific subcategories, such as fruits (1.7%), bread and cereals (1.0%), coffee, tea, and cocoa (0.9%), vegetables (0.8%), and sugar, jam, honey, chocolate, and confectionery (0.7%). Additionally, prices for meat—including fresh, chilled, and frozen varieties—and mineral waters, soft drinks, fruit and vegetable juices both rose by 0.7%.
Regionally, inflation fluctuations were evident between January and February 2025. In rural areas, the inflation rate increased by 0.2 percentage points to 3.2%, while urban villages saw a rise from 2.5% to 2.7%. Cities and towns experienced an inflation increase from 2.1% to 2.3% over the same period.
Despite this recent increase, Botswana’s inflation has been on a decline, with February 2025’s rate showing a 1.2% drop compared to February 2024’s 3.9%. Economists from the global rating agency Standard & Poor’s (S&P) have projected that, owing to ongoing food price pressures, Botswana may no longer see a continued decline in inflation. However, they expect the inflation rate to stay within the Bank of Botswana’s target range of 3-6%. “We do not anticipate further declines in inflation due to recent food price pressures. We project an average inflation rate of 3.6% from 2025-2028, which is close to the lower bound of the central bank’s 3%-6% target,” stated the economists.
The February 2025 Food Price Monitoring Analysis from the Food and Agriculture Organization (FAO) underscores that maize prices, a staple food in Southern Africa, remain elevated, with several nations recording new peaks at the start of 2025. This situation is predominantly attributed to tight domestic supplies following substantial harvest reductions in 2024 due to the El Niño-induced drought. The FAO anticipates that upward price pressures will persist until at least the second quarter of 2025, when the main harvest is expected to alleviate supply constraints partially.
The FAO report further noted that South Africa, Botswana’s principal trading partner, continued to experience soaring wholesale prices for white and yellow maize in 2025, reaching unprecedented levels in January. At those levels, prices for white varieties were 76% higher year-on-year, whereas yellow varieties saw a 52% rise. “Two key factors underpin much of the sharp price growth seen in the last 12 months. One factor is the reduced supply in 2024/25, due to a severe El Niño-induced drought that particularly affected the white maize crop, causing a 23 percent decline in production compared to the five-year average. Yellow maize production fell by a lesser extent. A second key factor is the strong export demand from neighboring countries for white maize, as they also suffered from harsh drought conditions and consequently import needs have risen,” elucidated FAO analysts in the Food Price Monitoring Analysis February 2025 report.
