A recent survey of 16 African economies revealed that nine recorded lower annual inflation in August compared to July, indicating a broadening disinflation trend across the continent. Mozambique, Côte d’Ivoire, and Angola recorded the biggest declines in inflation. However, this improvement occurred before Brent crude prices surged above $100 per barrel in September due to escalating tensions in the Middle East. The ongoing conflict has heightened concerns over global oil supplies.
The current Brent crude price stands at $107.8 per barrel, while West Texas Intermediate (WTI) is at $95.46 per barrel. The increase in crude oil prices began after President Donald Trump rejected Iran’s peace proposal, raising concerns that the conflict could disrupt global oil trade. This renewed energy shock may put pressure on fuel, transport, electricity, and food prices across African economies, potentially complicating the disinflation trend.
Mozambique recorded the sharpest decline in inflation among the 16 economies, with annual inflation falling to 6.45 percent in August from 7.48 percent in July. The decline was driven by a significant decrease in food and non-alcoholic beverages inflation, which fell to 8.91 percent from 12.62 percent in July. Additionally, price growth moderated across clothing and footwear, restaurants and hotels, and miscellaneous goods and services.
Côte d’Ivoire recorded the second-largest decline in inflation, falling to 1.2 percent from 1.9 percent, the lowest among the economies tracked. Angola also extended its disinflation trend, with inflation dropping to 8.78 percent from 9.33 percent, its lowest level since April 2015. The decline in Angola has been supported by relative stability in the kwanza and improved domestic supplies of essential goods.
In contrast, Nigeria recorded only a marginal decline in inflation, easing to 15.39 percent from 15.43 percent. Although the annual rate barely changed, monthly price pressures moderated more significantly, with food inflation falling to 19.57 percent from 20.31 percent. However, Nigeria has already begun to feel the impact of the global oil-price surge, with petrol prices rising to about N1,400 per litre in Lagos and Abuja.
The Central Bank of Nigeria cut its benchmark interest rate by 350 basis points to 23 percent in September, its biggest reduction since 2007, after inflation showed signs of moderating. Egypt’s inflation also declined, falling to 14.5 percent from 14.9 percent, driven by decreases in food and beverages inflation and transport inflation. Ethiopia recorded a smaller decline, with inflation falling to 15.1 percent from 15.3 percent.
Despite the overall decline in inflation, some African economies continue to face high inflation rates. Nigeria, Ethiopia, and Egypt remained among the continent’s highest-inflation economies. The surge in global oil prices may further complicate the disinflation trend, making the next round of inflation data crucial for many central banks.
Key points
- Nine of 16 African economies recorded lower annual inflation in August.
- A surge in global oil prices above $100 per barrel threatens to reverse disinflation gains.
- Mozambique recorded the sharpest decline in inflation, falling to 6.45 percent in August.
