Lesotho holds lowest annual inflation rate

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MASERU — The Central Bank of Lesotho says Lesotho’s annual inflation rate which stood at 4.3 percent in February is the lowest in the common monetary area.

The common monetary area includes Namibia, South Africa, Swaziland and Lesotho.

“Latest figures show that Lesotho’s inflation rate is the lowest in the Common Monetary Area,” said the bank in a statement.

“South Africa’s inflation stood at 5.7 percent in February 2010 while Swaziland recorded 5.4 percent annual inflation rate during the same month.”

The central bank said “subdued food inflation and relatively steady fuel prices were the major contributors to the generally flat trend in recent months”.

The lower inflation rate means the banks’ lending rates will be lower.

Lenders will also not receive high interest rates on their investments.

The central bank said Lesotho’s annual inflation rate has been hovering around this level since October last year after it dipped from 4.7 percent in September last year.

The annual food inflation was recorded at 3.5 percent in February this year after reaching a low point of 3.2 percent in December.

“Bread and cereals, which account for 22 percent of the CPI basket and 57.3 percent of the food component, registered less than one percent inflation in December 2009 and 1.2 percent in February 2010,” said the bank.

“Other major components of the CPI, such as clothing and footwear and household furnishings, equipment and routine maintenance, recorded an annual price increase of roughly five percent in February 2010.”

The central bank also said the government’s financial position remained strong during 2009.

“The second and third quarters also showed a combined surplus implying that government expenditure remained below budget during the period. This outcome is favourable for the inflation outlook,” said the bank.

The bank said net international reserves “continued to perform well against the target minimum set by the (monetary policy) committee” adding the bank recorded US$1.0 billion on March 18 against a target of US$700 million.

“The committee concluded that the monetary policy target of adequate foreign reserves continues to be achieved and decided to keep the NIR target unchanged as US$650-700 million,” the bank said.

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