Africa

Inflation in key African economies to slow into next year

FILE PHOTO: A vendor sells cassava flour at a traditional market in Bariga district, in Lagos, Nigeria January 15, 2021. Picture taken January 15, 2021. (REUTERS)

By Reuters | Thursday, April 25, 2024

Inflation in Kenya will remain one of the most-tamed in the region apart from South Africa, slowing to an average of 5.6% next year compared with 6.3% this year, the poll found.

Inflation in key African economies will slow into next year but remain stubbornly high in Nigeria due to sporadic flooding and difficult terrain for the naira currency, a Reuters poll found.

The acute shortage of dollars in much of the continent including Angola, Nigeria and Zambia has often put home inflation under significant strain due to a reliance on single commodity currency inflows such as crude oil and copper.

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Still, the poll of 15 analysts taken in the past week showed inflation would moderate more in countries with better diversified sources of dollar revenues such as Kenya.

Inflation in Nigeria is expected to quicken to 29.1% this year from an average of 24.5% last year, before it slows to 17.2% next year. It hit a 28-year high of 33.2% in annual terms last month.

Nigeria central bank governor Olayemi Cardoso raised the monetary policy rate by 200 basis points to 24.75% last month after a 400 basis point hike in February.

Even with a more coherent monetary policy now in place, and potential naira stability, Nigerian inflation will only fall slowly this year, Citi wrote in a note to clients.

The high inflation rate reflects ongoing elevated food price inflation which accounts for around 50% of the CPI basket and is only marginally impacted by monetary policy, Citi added.

High food price inflation is a result of flooding seen in many parts of the country in recent years, the rising cost of fertilizer and continuing insecurity in many food-producing regions.

Ghana inflation averaged 40.3% last year, but is expected to slow markedly to 18.7% this year and then to 12.1% in 2025.

Angolan inflation is forecast to slow to last year's average of 13.6% next year from 23.7% this year, while in Zambia it was seen slowing to 8.0% in 2025 from 12.3% this year.

Inflation in Kenya will remain one of the most-tamed in the region apart from South Africa, slowing to an average of 5.6% next year compared with 6.3% this year, the poll found.