Botswana's Inflation To Exceed BoB Target In 2026

The Bank of Botswana projects that Botswana's inflation will temporarily breach the upper bound of the bank's 3%- 6% inflation target range in Q2 2026.

According to the apex bank, inflation is expected to average 3.5% in 2025 and 5.9% in 2026.   

Furthermore, BoB says risks to the inflation outlook are assessed to be tilted to the upside due to market reaction following the recent widening of the Pula's trading margins, which led to an increase in prices of some goods and services, given the high import intensity of the Botswana economy. 

"Additionally, potential cost-push pressures and second-round effects stemming from the recent increase in water and electricity tariffs for businesses are anticipated to further elevate the inflation projection," said the Bank of Botswana.

"Inflationary pressures could also intensify if international commodity prices rise above forecast, global supply and logistics constraints persist, or if US tariffs exert upward pressure on costs."

Headline inflation decreased from 2% in June 2025 to 1.1% in July 2025, remaining below the lower bound of the medium-term objective range of 3% – 6%. The decrease in inflation between June and July 2025 was mainly on account of the adjustment in electricity tariffs effected in July 2025, which reduced headline inflation by 0.64 percentage points.