Inflation notches up

MASERU — Lesotho’s inflation rate for February increased to 4.3 percent, up from 4.01 percent the previous month, according to the latest figures released by the Bureau of Statistics.

Inflation is a rise in the general level of prices of goods and services in an economy or the erosion in the purchasing power of money over a period of time.

It is usually measured on a regular basis and is an important measure that is used in policy analysis and planning by the central bank and government.

The report shows that a bundle of goods and services that an average family needs rose by 0.2 percentage points in February.

According to the report, huge monthly price increases were recorded in the prices of staple foods such as maize-meal, rice, cabbages and tomatoes.

Clothing items, furniture, petrol and diesel also recorded large monthly increases, the bureau said.

Car parts and maintenance costs also recorded high price increases.

“High monthly price indices were recorded for some sub-groups such as operations of personal transport equipment 2.9 percent, fruits and vegetables 1.2 percent, other clothing 1.1 percent, furniture and carpets recorded 1.1 percent while bread and cereals increased by 0.4 percent,”  the report said. 

The bureau said air passenger transport fares had increased by 7.6 percent.

“This increase has been counteracted by a decrease in the price index of meat and meat products at 1.5 percent,” the report said.   

Lesotho’s inflation rate had hovered between 4.1 and 4.2 percent between October and January this year before it jumped to 4.3 percent in February.

Reports from neighbouring South Africa say there could be a massive fuel price increase in April triggering a rise in the inflation rate for Lesotho.

Lesotho is a net importer of fuel.

A portfolio market analyst with African Alliance, Thabang Mohloki, said inflation could pick up from the first half of this year.

“I see it (inflation) significantly picking up from the first half of this year to about 5.8 percent.

“It will stay in the lower range for the first quarter and will pick up for the rest of the year,” Mohloki said.

The effects of the lower inflation are that the rate of lending at banks is expected to decrease, hence lowering the cost of borrowing, he said.

This means that when inflation is low people can borrow from local banks at lower interest rates.

However this is bad news for people who have saved as interest from their savings will be lower.

Mohloki said he expects food prices to continue to put downward pressure on inflation but the Lesotho Electricity Corporation has applied for tariff increases this month.

“The upcoming 2010 Fifa Soccer World Cup event in South Africa could put upward pressure on prices as companies in the hotel, restaurant, general entertainment and travel industry look to take advantage of the influx of tourists into the region,” he said.

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