HARARE – The World Bank (WB) said Monday the median inflation rate for the Sub-Saharan African countries will rise moderately to 4.9% this year, as inflationary pressures remain high in some countries. The projection reflects a 28.94% sharp increase from an estimated 3.8 percent in 2018.
In its latest report on the regional economy, the bank named Zimbabwe among the six countries facing double-digit inflation rates unchanged from the previous year. The southern African nation’s annual inflation closed the year 2018 at 42.09%. However, the treasury is optimistic that inflation will close 2019 below 10%.
The other 5 countries, facing double-digit inflation rates includes, Angola, Liberia, Nigeria, Sierra Leone and Sudan.
However, the Breton Woods institution, said the aggregate figures mask notable variations across economies, with inflation pressures expected to ease in oil-exporting countries and metals exporters but rise in non-resource intensive countries. Greater currency stability and slowing food price inflation due to improved agricultural production underpin the decline in inflation in oil-exporting countries.
“Nevertheless, inflation remains elevated in Angola and Nigeria, at around 18 percent and 11 percent (year-over-year), respectively.
Although inflation is moderating among metals exporters, it is expected to remain elevated, owing to strong currency depreciations in some countries (Liberia, Sierra Leone, and Zambia), as current account deficits remain high. Inflation is projected to rise sharply to high double-digits in Liberia, driven in part by rapid monetary expansion.
“In non-resource-intensive countries, the increase in inflation mainly reflects deteriorating conditions in Sudan and Zimbabwe,” WB stated.
The Bank noted that central banks have responded to changes in consumer price inflation. In 2018, monetary policy eased across the region. As inflation moderated, several central banks cut interest rates.
Reflecting the continued decline in inflation pressures, Angola’s central bank cut interest rates further at the start of 2019. After keeping it unchanged for more than two years, the Central Bank of Nigeria cut its policy rate by 50 basis points in March, in an attempt to boost domestic demand, although inflation remained above the Central Bank of Nigeria’s 6–9% target range.
Among non-resource-intensive countries, the Bank of Ghana continued its easing cycle, lowering its main policy rate by 100 basis points, as inflation fell to 9% (year-over-year). The pressures on the domestic currency that emerged following the interest rate cut have abated, helped by Ghana’s latest Eurobond issuance.
In metals-exporting countries, central banks have so far left interest rates unchanged. Notably, the South African Reserve Bank has kept its benchmark repo rate unchanged, after raising it by 25 basis points in November 2018, although inflation has since declined to below the midpoint of the 3–6% target range.