The Bank of Mozambique (BdM) estimates that annual inflation will continue to slow down in the coming months, influenced by the decision to exempt Value Added Tax (VAT) on some basic products and to reduce toll tariffs by 60%.
“In the short term, the trend of slowing annual inflation is expected to continue, reflecting the impact of the VAT exemption on basic products (sugar, cooking oil, and soap), the downward adjustment of water and toll tariffs, and the drop in food prices on the international market, in a context of metical stability,” the central bank said.
According to the Economic Situation and Inflation Outlook report, cited by Lusa, the usual survey of economic agents “supports the expectations of slowing annual inflation, since the macroeconomic expectations of economic agents revealed in the May study point to an annual inflation rate of 4.90% in December 2025, which represents a downward revision of 3 basis points compared to the expectations disclosed in the April survey.” “However, considerable risks and uncertainties remain, mainly domestic in nature, which pose challenges to maintaining this scenario, notably the impacts of the worsening fiscal situation, uncertainty about the speed of recovery in productive capacity and supply of goods and services, as well as the effects of climatic shocks,” the report clarified.
According to data published by the National Institute of Statistics (INE), prices in the country recorded a deflation of 0.38% in April, interrupting a cycle of seven consecutive months of increases. According to the Consumer Price Index (CPI), the decline seen in April was mainly driven by falling prices in food and non-alcoholic beverages, which contributed with a negative 0.54 percentage points to the monthly variation.
This is the fifth deflation recorded in the country over the course of a year, following price decreases in May, June, July, and August 2024.
In year-on-year terms, i.e., compared to April 2024, inflation stood at 3.99%, a slowdown from 4.77% recorded at the end of March. The greatest inflationary pressures came from the food and non-alcoholic beverages categories, which increased by 8.79% in one year, and from restaurants, hotels, cafes, and similar services, which rose by 7.18%.
Source: Diário Económico
