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Inflation in Mozambique Set to Fall to One Digit… But Only in Q2 2023

Inflation in Mozambique Set to Fall to One Digit… But Only in Q2 2023

Consultancy Oxford Economics Africa believes that inflation in Mozambique, currently at 11.8 percent, is expected to fall below 10 percent in the second quarter of next year, in line with the decline in commodity prices.

“We estimate that inflation peaked in September and should return to single digits in the second quarter of 2023, in line with a decline with global commodity prices,” the analysts write in a commentary on the evolution of rising prices in Mozambique.

“Despite a moderation in food and energy prices since the end of March and the stability of the metical exchange rate, inflation will remain high in the last quarter of this year and the first three months of 2023 due to the base effect,” they add, noting that the economic stimulus plan announced by the President of the Republic, Filipe Nyusi, “is having a limited impact on inflation.”

At the end of September, the Bank of Mozambique raised the key interest rate (known as MIMO), from 15.25 percent to 17.25 percent and “the fact that inflation has already peaked, together with growing concerns about an economic slowdown in 2023, should discourage the Bank of Mozambique from raising its interest rate at the meeting on 30 November, keeping the MIMO rate at 17.25 percent,” the analysts conclude.

Year-on-year inflation in Mozambique slowed in October for the second consecutive month to 11.83 percent, according to data from the National Statistics Institute (INE).

The pace of price rises had been increasing since February to reach 12.96 percent in August, in line with the global inflationary trend, and then settled at 12.71 percent in September.

According to data from INE, accumulated inflation this year now stands at 8.8%.

This was also the first CPI bulletin in which data to calculate inflation was collected in eight points around the country.

As well as Maputo, Beira and Nampula, prices of markets and shops in Quelimane, Tete, Chimoio, Xai-xai and Inhambane province will also be analysed.

According to INE, transport, food and non-alcoholic beverages continued to be the goods and services that contributed most to the rise in prices.

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