The Botswana Public Officers Pension Fund (BPOPF) has raised concerns over the mounting cost-of-living pressures facing households.
It warns that successive fuel price increases have triggered a wave of inflation that is eroding purchasing power and placing family budgets under unprecedented strain.
In a recent economic briefing, the pension fund said many citizens have already felt the effects of rising prices in their daily lives with transport fares increasing, grocery bills becoming more expensive and household budgets coming under increasing pressure.
“Over the past few months, many Batswana have noticed the same uncomfortable reality: money simply does not stretch as far as it used to,” BPOPF noted.
According to the fund, inflation, which is the general increase in the prices of goods and services over time, has accelerated sharply, largely driven by fuel price hikes implemented over the past year.
The briefing points to two major fuel price adjustments by the Botswana Energy Regulatory Authority (BERA) as key drivers behind the current inflation surge.
The first increase came in September 2025, while a second and steeper adjustment followed in March 2026, when petrol prices rose by P5.05 per litre, diesel by P8.77 per litre and illuminating paraffin by P10.55 per litre.
“This type of inflation is harder to manage because it does not originate from within the economy. Much of it arrives from outside, through global fuel markets and supply chains we do not control,” the fund explained.
“Because fuel touches almost everything- moving goods to shops, powering businesses and getting people to work -each adjustment fans out quickly across the broader economy,” BPOPF said.
The pension fund noted that the cumulative impact of the fuel hikes has been severe, with headline inflation reaching 10.3 percent in April 2026, well above the Bank of Botswana’s target range of 3 to 6 percent.
“Transport alone accounted for 7.4 percentage points of that figure,” the report stated, highlighting the dominant role played by fuel-related costs in pushing prices higher.
BPOPF described the current situation as an example of “cost-push inflation”, where rising production and transportation costs drive up prices across the economy.
“This type of inflation is harder to manage because it does not originate from within the economy. Much of it arrives from outside, through global fuel markets and supply chains we do not control,” the fund explained.
The report also examined the response by the Bank of Botswana, which raised the Monetary Policy Rate from 1.9 percent to 3.5 percent in October 2025 before increasing it further to 5.5 percent in April this year.
However, unlike conventional monetary tightening measures, the central bank instructed commercial banks not to pass the higher benchmark rates on to borrowers.
“Directing banks not to raise their prime lending rates was the Bank’s way of protecting an already fragile economy from the demand-killing side effects of a traditional rate hike,” BPOPF explained.
The pension fund warned that elevated inflation poses risks not only to consumers but also to investors and savers.
“Rapid inflation erodes the real value of returns. If your savings grow at 4 percent but inflation is running at 8 percent, you are effectively losing purchasing power,” the briefing noted.
Looking ahead, BPOPF said fuel prices, utility tariffs and developments in global commodity markets will continue to influence the inflation outlook, with households likely to remain under pressure in the months ahead.
