While rising energy prices and supply chain disruptions linked to conflict in the Middle East are reigniting inflationary pressures across much of Africa, Egypt, Angola, and Zambia are emerging as rare bright spots, extending declines in consumer prices even as many of their peers battle higher food, fuel, and transport costs.
The divergence highlights how exchange-rate stability, economic reforms, stronger commodity earnings, and improved food supplies are helping shield some African economies from a renewed surge in inflation triggered by external shocks.
Data from Trading Economics shows Egypt, Angola, and Zambia continuing to record easing price growth despite the impact of higher global energy costs that have weighed on many developing economies.
Egypt’s annual urban inflation slowed for a second consecutive month to 14.6 percent in May from 14.9 percent in April, the lowest level since February. In Angola, annual inflation eased for the 22nd consecutive month to 10.9 percent from 11.6 percent, the lowest reading since May 2023 and bringing Africa’s third-largest oil producer closer to single-digit inflation.
Zambia’s annual inflation rate declined to 6.6 percent from 6.8 percent, the lowest since February 2018 and the fifth consecutive monthly slowdown.
The three countries stand apart from much of the continent, where policymakers are grappling with the inflationary fallout from higher oil prices, rising shipping costs and disruptions to global trade routes linked to tensions in the Middle East.
According to the World Bank’s latest Global Economic Prospects report, inflation pressures have resurfaced across several developing economies, with governments in Sub-Saharan Africa facing limited room to cushion the impact.
“Nonetheless, some authorities have implemented measures to shield vulnerable households, including expanded or temporary fuel subsidies (for example, Ethiopia and Ghana), delays in planned subsidy reforms (for example, Angola), and adjustments in administered prices or transfers (for example, Senegal),” the World Bank said.
The multilateral lender noted that financial conditions had tightened as sovereign bond yields rose, currencies weakened and investor sentiment deteriorated following heightened geopolitical tensions.
Egypt’s reform gains cushion external shocks
Egypt has largely resisted the inflation resurgence seen elsewhere on the continent.
Inflation has continued to moderate from the extreme levels recorded following the country’s currency crisis and subsequent International Monetary Fund-backed reforms. The decline reflects the benefits of currency liberalisation, tighter monetary policy and efforts to restore investor confidence.
Although the Arab nation raised fuel prices by between 14 and 17 percent in March amid elevated global oil prices, inflation has continued to trend lower. Data from African Markets show that the Egyptian pound appreciated by 2.08 percent against the US dollar in May, strengthening slightly from 53.3 pounds per dollar to 52.2.
Analysts at Goldman Sachs said favourable base effects helped drive the latest decline in inflation but warned that the relief may prove temporary. “Favourable base effects will see another modest slowdown in headline annual inflation in May, but pressures are mounting.”
The global investment bank expects inflation to peak at around 17.5 percent in August, while Emirates NBD forecasts a peak of about 17 percent. During its May meeting, the Central Bank of Egypt left its benchmark interest rate unchanged at 19 percent as policymakers balanced moderating inflation against growing external risks.
Africa’s second-biggest economy, valued at $364.6 billion last year according to the IMF, is projected to continue benefiting from its strategic role as a regional energy and trade hub despite heightened geopolitical uncertainty.
Oil revenues and policy discipline support Angola
Angola’s inflation story has been supported by a combination of monetary discipline, exchange-rate stability, and stronger oil revenues.
Unlike many African economies that suffer when crude prices rise, the Northern African country has benefited from higher oil prices as one of the continent’s largest petroleum exporters. Increased export earnings have strengthened foreign-exchange inflows, supported fiscal balances, and helped contain imported inflation.
Last month, the National Bank of Angola cut its benchmark interest rate by 50 basis points to 17 percent after inflation continued its downward trajectory. The central bank also lowered its 2026 inflation forecast to 11.5 percent while maintaining its economic growth projection at 3.5 percent.
The kwanza remained broadly stable during May, trading near 917 to 918 per US dollar, helping limit the pass-through of higher import costs to consumers.
“While oil exporters are benefiting from higher energy prices, most SSA economies are dependent on energy imports, contributing to deteriorating external and fiscal positions,” the World Bank said.
Angola has also intensified reforms in its financial sector, raising capital requirements for banks and opening the market further to international financial institutions as it seeks to position Luanda among Africa’s leading financial centres.
Stable currency, copper exports aid Zambia
Zambia’s progress has been driven largely by exchange-rate stability, stronger copper prices and improving agricultural output.
The copper-rich nation recorded inflation of 6.6 percent, extending a steady decline that began earlier this year.
The Zambian kwacha was Africa’s strongest-performing currency in May, appreciating by 2.01 percent against the US dollar. The currency strengthened from 18.86 kwacha per dollar at the beginning of the month to 18.48 by month-end.
Higher copper prices have boosted export earnings and strengthened confidence in Zambia’s economic recovery, while favourable rainfall conditions have improved expectations for maize and corn harvests.
The stronger currency has reduced imported inflation pressures, while increased food production has helped ease one of the biggest drivers of inflation across the continent.
The Bank of Zambia cut its benchmark policy rate by 25 basis points to 13.25 percent last month, citing improved inflation prospects, a stable currency, and expectations of a strong agricultural season.
Despite signs of slowing business activity, firms remain optimistic about future growth.
“Zambia’s PMI declined to 49.3 in May, signalling a slight contraction after two months of growth, as weaker demand and reduced money in circulation led to a renewed fall in new orders,” said Musenge Komeki, head of sales at Stanbic Bank Zambia. “Despite current softness, overall business sentiment strengthened significantly, reaching its highest level since the start of 2018.”
Other bright spots emerge
Egypt, Angola, and Zambia are not alone in recording easing inflation despite mounting global uncertainties.
Senegal’s annual inflation rate edged down to 1.3 percent from 1.4 percent in each of the previous two months, as price growth moderated across several consumer categories.
Zimbabwe also extended its disinflation trend, with annual inflation easing to 4.4 percent from 4.8 percent, reflecting relative exchange-rate stability and tighter monetary conditions.
While the economic drivers differ from country to country, the data suggest that inflationary pressures are not rising uniformly across Africa despite higher energy costs and supply-chain disruptions linked to tensions in the Middle East.
Most African economies still face rising price pressures
The three countries stand in contrast to many African economies, where inflation remains elevated or is beginning to accelerate again.
Kenya’s annual inflation rate rose to 6.7 percent in May, the highest since January 2024, driven largely by higher transport costs following fuel price increases. Ghana’s inflation rate accelerated to 3.7 percent, while Rwanda’s inflation climbed to 12.3 percent, its highest level since October 2023.
Ethiopia’s inflation rate jumped to 13.4 percent from 11.7 percent as higher fuel and food costs pushed the country back into double-digit inflation territory.
Nigeria’s inflation rate also rose for a third consecutive month to 15.93 percent from 15.69 percent, reflecting the impact of higher energy and transport costs and South Africa’s annual inflation rate rose to 4.5 percent from 4.0 percent in April, marking the third consecutive monthly increase and the highest reading since July 2024.
Recent business activity surveys show the pressure is spreading. Private-sector activity contracted in five of Africa’s eight largest economies in May, up from three economies in April, underscoring the strain rising costs are placing on businesses and households.
The recent easing in Middle East tensions and the decline in oil prices from above $100 a barrel to below $80 have raised hopes that inflationary pressures could begin to moderate later this year.
“For now, the inflation uptick in Nigeria appears to be more of an external shock phenomenon and domestic structural headwinds than a reflection of domestic macroeconomic instability,” said Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise.
“The policy priority should therefore be to tackle the structural cost drivers of inflation, particularly insecurity, food supply constraints, transportation costs and energy prices.”
The inflation outlook could, however, improve in the coming months for countries seeing a spike in inflation following a ceasefire agreement between the United States, Israel, and Iran, which has helped calm global energy markets after nearly four months of heightened tensions.
Oil prices retreated from above $100 to below $80 per barrel after the announcement, easing concerns over potential supply disruptions in the Middle East, a region that accounts for a significant share of global crude exports. Lower crude oil prices typically filter through to domestic fuel costs, transport expenses and broader consumer prices.
If the ceasefire holds and oil prices continue to soften, May’s inflation spike may prove to be a temporary setback rather than the start of a broader inflation resurgence across Africa
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