Inflation in Africa remains elevated, fueled by supply shocks in agriculture and imported inflation due to weak local currencies and relatively high commodity prices, according to the African Development Bank (AfDB).
Africa’s deteriorating inflation picture contrasted with the gains made in the rest of the world, largely stemming from the weak transmission of monetary policy across the continent relative to advanced economies and structural weaknesses, AfDB stated.
In Egypt, Nigeria, and Ethiopia, three of the six largest African economies by nominal GDP in 2023, inflation is now above 20 percent.
Some central banks have raised their policy rates consistently since inflation peaked in 2022 but despite these efforts, inflation remains stubbornly high and often rising.
Supporting the AfDB, the World Bank said despite a recent deceleration in global inflation amid easing commodity prices, inflation has remained sticky in many countries.
Here are ten African countries with the highest inflation rates
Zimbabwe topped the African Development Bank’s chart as the country with the highest inflation rate with 184.1 percent inflation rate. However, the Zimbabwe National Statistics Agency published a month-on-month inflation rate of 4.7 percent in December 2023.
In 2023, Zimbabwe began to measure inflation using a weighted average of items priced in Zimbabwean dollars and U.S. dollars. Previously the official rate was based only on items in the local currency.
“It is important to note that the Zimbabwean dollar inflation is no longer a true representative of the cost of living in Zimbabwe as the country is in a dual currency system where prices and household incomes are also in both USD and local currency.
“Therefore, Zimbabwe’s inflation needs to be recalibrated to reflect the dual currency nature of incomes and prices in the economy to provide a true reflection of the cost of living in the country,” the Reserve Bank of Zimbabwe said in 2023.
Sudan ranked second in highest inflation rates with 139 percent as published by the AFDB.
Sudan’s inflation eased from 359.1 percent in 2021 to 139 percent in 2022 due to unifying the exchange rate and reducing monetisation of the fiscal deficit. AFDB further projected that inflation will moderate to 83.2 per cent in 2023 and 75.5 percent in 2024.
Sierra Leone’s inflation rate rose to 26.1 percent in 2022 from 11.9 percent in 2021, driven by food and fuel inflation and depreciation of the leone. Inflation was projected to rise to 27.1 percent in 2023 and decline to 20.8 percent in 2024 as external shocks subside, the AFDB economic outlook said.
However, the Sierra Leone Statistics Agency said that Annual National Consumer Price Inflation (year-on-year) for December 2023 stood at 52.16 percent, down by 2.04 percent from 54.20 percent in November 2023. This put Sierra Leone next to Sudan.
Malawi’s inflation rate jumped from 9.3 percent in 2021 to 21 percent in 2022 on account of higher food and nonfood prices. Despite tight monetary policy, inflation was expected to rise to 22.8 percent in 2023 before falling to 15.4 percent in 2024, the report said.
As of November 2023, Malawi’s inflation rate stood at 33.10 per cent according to the Reserve Bank of Malawi.
Ethiopia, one of the six largest African economies by nominal GDP in 2023, had an inflation rate above 20 percent, the report said. Ethiopia’s inflation rose to 34 percent in 2022 from 26.6 percent in 2021.
Both growth and inflation were impacted by internal conflict, drought, and the effects of Russia’s invasion of Ukraine on commodity prices. Inflation was projected to decline to 28.1 percent in 2023 and 20.1 percent in 2024, the AFDB report said.
Ethiopia’s latest inflation as of June 2023 showed a year-on-year inflation rate of 29.3 per cent, but the National Bank of Ethiopia projected an inflation rate below 20 per cent by June 2024 and below 10 per cent by June 2025.
Nigeria ranked next to Ethiopia with an inflation rate of 28.92 percent as of December 2023. Inflation peaked at a two-decade high, fueled by energy and food price increases and the passthrough effects of exchange rate depreciation.
The National Bureau of Statistics said that the year-on-year inflation rate was 7.58 percent higher than the rate recorded in December 2022, which was 21.34 percent.
Higher import costs of oil products, fertiliser, and food products, exacerbated by Russia’s invasion of Ukraine, worsened inflation in Burundi. Inflation doubled from 8.4 percent in 2021 to 18.7 percent in 2022.
Inflation was projected to drop to 10.3percent in 2023 and 9.0 per cent in 2024 with measures aimed at boosting agricultural production and stabilising the exchange rate. However, the Bank of the Republic of Burundi said that the inflation rate as of December 2023 stood at 27.3 percent.
Inflation was 31.5percent in 2022, up from 10 percent in 2021, driven by food and energy prices and depreciating local currency, the AFDB report said. AFDB further projected that inflation would remain elevated at 44.7percent in 2023 and decline to 20.4percent in 2024, driven by the base effect and food and energy inflation.
Headline inflation eased to 40.1 per cent in August 2023, from 43.1 per cent in July, after increasing for three consecutive months, the Central Bank of Ghana said. As of December 2023, the inflation rate stood at 23.2 percent, corroborating AFDB’s 20 per cent projection.
Increased export revenue and agricultural production in Angola reduced food inflation and overall inflation from 25.8 percent in 2021 to an estimated 21.3 percent in 2022, the AFDB report said.
Inflation was expected to drop further, to 13.2 percent in 2023 and 9.6 percent in 2024, as the availability of export revenue in the exchange rate setting eased pressure via exchange rate pass-through. However, the National Bank of Angola said that the current inflation rate stood at 20.01 percent.
São Tomé and Príncipe
São Tomé and Príncipe imported 100 per cent of its oil and half of its food. As a result, inflation rose to 17.9 percent in 2022 from 8.1percent in 2021, on the back of the enduring COVID-19 pandemic effect. The Central Bank of Sao Tome and Principe said that the inflation rate as of October 2023 stood at 13.01 percent.
The International Monetary Fund said that although inflation is generally easing in Africa, it is too early to celebrate. For too many African countries, inflation is still too high, and medium-term growth rates are too low.
Therefore, Africa’s policymakers should prioritize efforts to boost resilience by ensuring macroeconomic stability and accelerating structural reforms to foster stronger, more inclusive growth.