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MBABANE - Global oil price forecasts for the 2023 third and fourth quarter indicate that prices will be slightly higher than previously expected.

The Central Bank of Eswatini (CBE) in its Eswatini inflation forecasts for 2023-2025 stated that global brent crude oil prices were expected to remain elevated due to extended crude oil production cuts and increasing global demand. “As a result, this will put upward pressure on oil prices in the short-term,” said the CBE. The bank mentioned that in the outer years, administered prices, mainly utilities were expected to exert upward pressure on inflation.


It was stated that as a result, inflation for the third and fourth quarter of 2023 continued to trend upwards, despite the downward shift from the lower out-turn. The third quarter of 2023 is forecasted at 4.12 per cent (from 5.48 per cent) and the fourth quarter is forecasted at 4.39 per cent (from 5.53 per cent). Consequently, the annual average inflation forecast for 2023 is revised downwards to 4.93 per cent (from 5.55 per cent). The bank reported to have revised down its short-to-medium term forecasts. The lower out-turn in food price inflation has generally caused inflation to subside recently. The lower trend in overall inflation, coupled with the expected decline in food inflation, has resulted in inflation forecasts being revised downward. While the out-turn for August 2023 was lower than what was forecasted, upward pressures to the inflation outlook still proved persistent as some of the factors guiding the forecasts remained elevated.

Among these is the exchange rate, which despite an expected appreciation, remains at a weaker position as growth prospects in South Africa (SA) remains uncertain. Despite higher oil price pressures expected in the short-to-medium term, the inflation rate for 2024 is revised down, generally aligning with a moderation in food prices and base effects. The Rand is still expected improve and pose downward inflationary pressure on inflation. With inflationary pressures expected to moderate in 2025, the inflation forecast for 2025 is thus revised down from the previous projection. Therefore, inflation for 2024 is forecasted at 4.68 per cent (from 5.36 per cent), while for 2025 is forecasted at 5.06 per cent (from 5.13 per cent).


Economist Sanele Sibiya recently indicated to this publication that the recent hike in global oil prices was likely to negatively affect the headline inflation rates. Sibiya said indeed over the past months, the headline inflation had been declining significantly owing to the decrease in food prices. He said the decline in inflation was expected, more especially during the said months. He said the recent hikes would definitely impact the inflation rates which were highly possible to shoot up again. It is worth noting that early this month, fuel prices increased due to the global oil prices. Under the latest adjustments, the prices of petrol have risen by E1.50 per litre, while diesel now cost E2.50 more per litre. Additionally, illuminating paraffin has seen a price hike of E2.50 per litre.

Based on the current oil and rand prices, the latest data from the Central Energy Fund (CEF) in SA shows that diesel prices may be hiked by around R2 a litre, depending on the grade. Petrol 95 and 93 unleaded could be increased by R1.23 a litre and R1.15c, respectively. This will push fuel prices to levels last seen in July last year, the Automobile Association (AA) said. However, there is still some time to go before the final prices are set. Fuel prices will only be adjusted on October 4. South African fuel prices are largely determined by international oil costs and the rand exchange rate, as oil is priced in dollars.