MBABANE – Eswatini’s annual consumer inflation dropped slightly for the fourth month running, dipping to 3.2% in May 2025, according to the Central Bank’s latest economic update released on Monday.
The bank attributes the decline to slower price increases in key categories including food, education, clothing and footwear. Notably, food inflation fell to 3.2%, driven by lower prices for bread, meat, and sugar. Education costs also eased, particularly in secondary and tertiary levels. However, rising transport and hospitality prices partly offset the overall moderation.
On a month-to-month basis, inflation cooled to 0.1% in May from 0.9% in April.
The report also shows that the prime lending rate was cut to 10.25% in May, alongside a drop in the discount rate to 6.75%. These changes come amid monetary adjustments and growing credit activity.
Private sector credit rose to E21.6 billion, a 1.5% increase from April and 9.2% higher than a year earlier. The bulk of this growth came from loans to businesses, particularly in manufacturing, tourism, construction and agriculture. Credit to households, however, declined by 1.4%, mainly due to fewer personal unsecured loans. Housing and vehicle financing recorded modest gains.
The Central Bank notes that credit to small and medium enterprises (SMEs) now accounts for 31% of all business lending, while larger firms hold the remaining 69%.
At the same time, Eswatini’s gross official reserves dropped by 12.6% month-on-month to E8.2 billion in June, although the figure represents a 2.2% year-on-year increase. Reserves now cover just 1.9 months of imports, down from 2.1 months in May. The fall is linked to rand outflows and government fiscal payments.
Meanwhile, total public debt reached E38.4 billion in June, or 40.2% of GDP. This marks a 4.9% increase from the previous month, driven by growth in both external and domestic borrowing. External debt climbed sharply to E17.8 billion following the disbursement of a budget support loan. Domestic debt rose slightly to E20.6 billion.
The Central Bank also conducted a bond auction in June offering E200 million worth of securities. Demand outpaced supply, with bids totalling E316.7 million. Most demand was directed toward longer-term bonds.
On the currency front, the Lilangeni strengthened against the US dollar in June, trading at an average of E17.84, up from E18.11 in May. Analysts cite a weakening dollar, firm gold prices, and consistent South African monetary policy as key contributors.
The trade account posted a surplus of E351.5 million in April, down from E944.5 million in March. The drop was primarily due to a sharp decline in sugar exports. Imports remained relatively unchanged at E2.9 billion. South Africa remained Eswatini’s top trading partner, accounting for over two-thirds of both imports and exports.
Total exports for the January–April period stood at E13.9 billion, up 8.4% from the same period last year, while cumulative imports reached E12.3 billion.
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