Consulting firm NKC African Economics today reckoned that inflation in Mozambique is expected to rise from 3.1% last year to 5.3% this year due to the covid-19 pandemic and rising oil prices.
“We anticipate an acceleration of inflation to 5.3% this year, compared to the 3.1% recorded in 2020; the central bank had anticipated a rise in inflation with an unexpected 300 basis point hike in the key interest rate in January, but we do not expect further moves this year,” the analysts wrote in a commentary on Mozambique’s inflation developments in May.
Mozambique accentuated deflation (reduction in prices) in May compared to the previous month, with the price of the basket used to calculate Mozambique’s Consumer Price Index (CPI) falling 31 basis points from April to May, leading to monthly deflation of 0.31 percent, but still an increase of 30 basis points from 5.19 percent (in April) to 5.49 percent in May, compared to the same month last year.
“While continued weak domestic demand will continue to contain inflation this year, the price index will face upward pressures due to currency depreciation, rising oil prices and disruptions to distribution chains,” write the analysts at this African branch of Oxford Economics.
Last year, the metical fell by 10 percent against a backdrop of falling raw material prices and strong global aversion to risk, although it managed to recover part of that loss in the first months of this year, when it posted a strong rise, which has since stabilised.
Accumulated inflation in the first three months of 2021 is now 3.07%.
Mozambique ended 2020 with accumulated inflation of 3.52 percent.
The CPI figures are calculated from price changes of a basket of goods and services, with data collected in the cities of Maputo, Beira and Nampula.
