Inflation climbs to 4.1% in January 2026

Botswana’s annual inflation rate edged up to 4.1 percent in January 2026, marking a 0.2 percentage point rise from the 3.9 percent recorded in December 2025. The latest Consumer Price Index (CPI) data released this week attributes this uptick primarily to increasing costs in transport, food and non-alcoholic beverages, as well as personal care services and miscellaneous goods. The transport sector emerged as the dominant driver of inflation in January, contributing 1.6 percentage points to the overall rate.

This was followed by food and non-alcoholic beverages and miscellaneous goods and services, each adding 0.9 percentage points. Alcoholic beverages and tobacco accounted for 0.4 points, while clothing and footwear, along with furnishing, household equipment, and routine maintenance, contributed 0.2 points each. Health, education, and the hospitality sector, restaurants and hotels, each added 0.1 percentage points.

The inflationary pressure in transport largely stems from rising retail vehicle prices. The government’s recent decision to devalue the Botswana Pula against the currencies of major trading partners has accelerated the cost of imported vehicles. Projections for 2026 suggest that import prices may remain elevated due to expected exchange rate fluctuations between the Japanese Yen and the US Dollar.

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Analysts forecast a 3.7 percent appreciation of the Yen against the Dollar this year. Given that approximately 65 percent of vehicles sold in Botswana in 2024 were imported from Japan, these currency dynamics are poised to further inflate vehicle import costs. Food and non-alcoholic beverages saw price increases across multiple categories, with fresh, chilled, and frozen fish leading at a 2.9 percent rise.

Coffee, tea, and cocoa prices followed, climbing 2.2 percent, alongside fresh meat at 2.1 percent. Other notable contributors included bread and cereals (1.7 percent), milk and dairy products (1.3 percent), soft drinks and fruit juices (1.2 percent), oils and fats (1.0 percent), and sugar, honey, and confectionery (1.0 percent). Fruits and vegetables also nudged prices higher, rising 0.9 and 0.4 percent respectively.

The cost of miscellaneous goods and services was pushed upward by a 1.8 percent rise in personal care services. Insurance services increased by 0.6 percent, social protection by 0.4 percent, and taxes, licenses, and fees by 0.3 percent, while financial services edged up 0.1 percent. Alcoholic beverages recorded growth as well, with alcohol prices up 1.0 percent and tobacco 0.4 percent.

The inflationary trend in clothing and footwear reflected higher costs for apparel, as well as cleaning, repair, and rental services. Similarly, the furnishing and household equipment category grew due to rising prices for household maintenance goods, appliances, carpets, furniture, and tableware. Education costs contributed to inflationary pressure, with school tuition fees for pre-primary and primary education rising 2.4 percent, and fees for secondary and tertiary education increasing by 1.7 percent.

Geographically, urban villages experienced the highest inflation rate at 4.3 percent in January, up from 4.1 percent in December 2025. Inflation in cities and towns edged up 0.1 percentage point to 3.7 percent, while rural villages saw a modest increase from 4.1 to 4.2 percent. Tradeables inflation also climbed, with the overall tradeables rate reaching 6.4 percent in January, a 0.3 point increase from December’s 6.1 percent.

Imported tradeables inflation rose to 6.3 percent, up 0.2 points, while domestic tradeables inflation edged up 0.2 points from December’s 6.2 percent. The Ministry of Finance projects inflation to accelerate from an average of 3.5 percent in 2025 to 5.9 percent in 2026. Several factors are expected to drive this upward trend: the recent Pula depreciation placing upward pressure on import prices, escalating trade tariffs, geopolitical tensions disrupting supply chains, and adverse weather conditions pushing food prices higher. Additionally, recent hikes in water and electricity tariffs for businesses are likely to compound inflationary pressures throughout the year.

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