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Oxford Economics predicts 9% inflation

The consultancy Oxford Economics predicts that average inflation in Mozambique this year will be above 9%, its highest value since 2017, and foresees social unrest due to the impact of prices on the transport sector.

“Inflation has reached a new record for the last four years, in a context of high oil and fuel prices caused by disruptions in the supply chain related to the war between Russia and Ukraine and the Covid-19 pandemic,” a comment on price developments released on Monday reads.

“We predict that average annual inflation will rise, from 5.7% in 2021, to more than 9% this year,” the analysts write in a commentary to which Lusa has had access.

In the analysis, they point out that “the difficulties in the global supply chain were exacerbated by the series of tropical cyclones that hit central and northern Mozambique at the beginning of the year, as well as by the ongoing war in Cabo Delgado”.

The analysis adds that the rise in prices disproportionately affects specific sectors, such as transport.

“Mozambican drivers are paying 33% more for fuel than they were 12 months ago. This sharp rise in fuel costs has sparked a wave of protests in the impoverished southern African nation, with demands from public transport operators for regulated fares to be increased,” Oxford Economics says.

The analysts expect troubled times in Mozambique, as “the government has ruled out the possibility of increasing subsidies to fuel and bakeries and, in fact, indicated that these subsidies will probably be eliminated”.

They also note that the approval by the International Monetary Fund (IMF) of a US$456 million programme for the country “increases the probability that subsidies will be reduced soon, which will create more pressure on consumer prices”.

Source:  https://clubofmozambique.com/news/mozambique-oxford-economics-predicts-9-inflation-218799/