Consultant NKC African Economics has raised its average inflation forecast for this year in Mozambique, estimating a price increase of around 5.5%, a revision explained by the country’s economic conditions.
“Although weak domestic demand this year will contain inflation, the consumer price index will face upward pressure due to currency weakness, rising oil prices and disruptions in the distribution chain,” write the analysts at Oxford Economics’ African branch.
“We will adjust our inflation forecast to reflect an average of 5.5% from the previously forecast 4.2%, which compares with 3.1% in 2020,” the commentary sent to clients reads.
The metical depreciated 10% last year “in a context of falling prices for Mozambique’s commodity exports and a global aversion to risk,” the consultants add, noting that in addition to the fact that the country is a net importer of most consumer goods, the average price of oil is expected to increase by almost 33% this year “and should drive inflation in the transport sector significantly higher starting in the second quarter.
On Wednesday, the National Institute of Statistics reported that year-on-year inflation rose to 4.09% in January, passing the 4% threshold, which had not been surpassed since 2018.
The upward trend in year-on-year inflation has been in place since August 2020, when it stood at 2.75%, according to INE’s Consumer Price Index (CPI) tables.
The INE bulletin also corrects 2020 inflation from 3.52% (published in January) to 3.14%.
It should be noted that the Bank of Mozambique announced in January a “substantial upward revision of the inflation outlook for the medium term,” which reflects “the continued depreciation of the metical, in an environment of increased risks and uncertainties.
The CPI figures are calculated by INE from the price variations of a basket of goods and services, with data collected in the cities of Maputo Beira and Nampula.
