By Delisa Thwala
Amid the recently approved Electricity tariff hike, the Central Bank of Eswatini (CBE) expects the cost of goods and services to increase moderately in 2025.
The Bank revised up its inflation forecast for 2025 to 5.25 per cent (from 4.87 per cent forecasted in November 2024).
This is contained in the Monetary policy statement authorized by CBE Governor Dr Phil Mnisi.
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The policy states that in 2025, some factors that could potentially cause a surge in the cost of goods and services include, economic growth:
If the global economy is on the rise, this can lead to an increase in demand for goods and services, which can then lead to higher prices.
“Inflation: When there’s more money in circulation, or if the value of currency declines, this can lead to inflation, which means the cost of goods and services will rise,” reads the statement.
It further states that, trade disputes: If trade disputes arise between countries, this can disrupt the flow of goods and services, leading to shortages and higher
Meanwhile the policy statement mentions that As measured by gross domestic product, economic activity is forecasted to grow by a lower 3.6 per cent in 2024 from 5.0 per cent in 2023 before growing by a sizable 8.3 per cent in 2025.
The expected moderation in 2024, is on account of high base effects in the services sector in 2023, coupled with a slow start in the implementation of mega projects.
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The expected high acceleration in economic growth in 2025 is largely accounted for by construction activity earmarked for the medium-term.
It further highlights that the CBE maintained the discount rate at 7.0 per cent. Headline inflation increased to 3.9 per cent in December 2024 from 3.7 per cent in November 2024.
Worth mentioning is that, banks are expected to maintain the prime lending rate on loans extended to individuals and businesses at 10.5 percent until the next monetary policy meeting.