Inflation falls, but food prices keep rising

Single-digit inflation will please the Bank of Mozambique, but systemic problems remain

Good afternoon. Annual inflation dipped back into single digits this week, as the central bank has targeted, for the first time since June last year.

The decline in the inflation rate, Standard Bank economist Fausio Mussa noted this afternoon, “reflects non-food inflation moderating to 5.5% year on year … due to monetary policy tightening, which subdues aggregate demand, and stable local fuel prices since Aug 22.”

The price of food, however, grew on average by 15.7% in the year to the end of January, “due to entrenched supply-side pressures,” Mussa wrote.

There’s little reason, then, to cheer these latest figures; people’s purchasing power is being hit by tighter monetary policy, which is restraining price increases in some sectors, but not of food, the biggest expenditure of the poor.

Flooding across the country has washed away farmers’ crops on a large scale, meaning food prices can be expected to continue to rise in the coming weeks. Some supply side interventions are underway, notably the Sustenta programme, which should increase production in the long term. But more short-term pain can be expected.

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Agenda:

• Tomorrow: Nyusi is in Addis Ababa this weekend at the 36th Summit of Heads of State and Government of the African Union, discussing “Accelerating the implementation of the African Continental Free Trade Area (AfCFTA)”

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Today’s headlines:

• New law on NGOs should be withdrawn, says Human Rights Watch

• Local protest halts Chibuto heavy sands project 

• Rhino poaching baron ‘Navara' formally charged 

• 90 schools closed due to floods in Maputo

Today’s front pages in Maputo. Photo © Faizal Chauque / Zitamar News