The Central Bank of Eswatini (CBE) has released its latest Economic Review and Inflation Report, signaling potential challenges ahead for the kingdom’s price stability. While inflation in 2023 remained lower than anticipated at 4.67 per cent, looming factors suggest a possible uptick in the coming year.

One of the key concerns highlighted in the report is the potential increase in domestic administered prices, particularly utilities, expected in the second quarter of 2024. This impending rise casts a shadow over future inflation rates, despite Eswatini successfully containing inflation in 2023, surpassing the initial forecast of 5.05 per cent.

Several factors contributed to the lower-than-expected inflation rate in 2023, including a downward trend in food inflation, which played a pivotal role in moderating overall inflation. Additionally, the recent downward adjustment in fuel prices for January 2024 provided temporary relief.

However, the report underscores the influence of lower inflation forecasts in South Africa, Eswatini’s main trading partner, on Eswatini’s inflation dynamics. With South African inflation forecasts expected to decrease, the reduced import costs are likely to exert downward pressure on inflation in Eswatini.

Moreover, a global slowdown in oil prices, forecasted to be lower than previously anticipated, is anticipated to contribute to overall lower inflation in Eswatini. Additionally, the report projects the potential appreciation of Eswatini’s currency, the Lilangeni (SZL), which could further impact inflation dynamics in the country.

As Eswatini navigates these economic factors, policymakers will need to closely monitor inflation trends and implement appropriate measures to ensure price stability and economic resilience in the face of potential challenges.