ECA Price Watch Centre for Africa

The ECA Price Watch Centre for Africa is a One-Stop-Shop providing information on price levels across African Countries. It aims to provide decision-makers with a unique view of price variations in countries, Regional Economic Communities and at Africa level. It is intended to support short and medium terms economic governance and long term sustainable development planning for countries. The Price Watch Centre provides information on one of the most watched economic indicator, the Consumer Price Index and inflation. A Consumer Price Index measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households in members States and their aggregates for Regional Economic Communities. The Centre also include information on the pertaining exchange rate for each country as well as other related national economic indicators.

A majority of African counties have an average price increase higher than 3% annually.

Quarterly inflation has remained high in most of African RECs: close to or more than 10 per cent in most cases. Significant increases in the first half of 2020 and seem to persist beyond. ECCAS, COMESA and SADC are those communities hit hardest. In CEN-SAD, EAC and UMA, inflation rates are kept to more stable levels.

 
Mineral-rich countries, agriculture commodity exporters and oil importing countries have recorded noticeable increases in quarterly inflation rates. Inflation in oil exporters countries remained quasi-stable but high.

 
Zimbabwe, Ethiopia, Angola have the highest inflation rates to date.

Food price index: January 2020=100

Food prices are the major driver of inflation, with 9 countries seeing an increase of more than 10%. 

Food and non-alcoholic beverage count for a large part of the consumer basket in a large number of countries:  more than 50 per cent in 13 countries and more than 30 per cent in 27 countries.

In Nigeria, food items have been overtaking all consumption basket items, including food items that are imported. In over instances, locally produced food items have been recording higher inflation rates as well. 

 
Like in several countries food items have been contributing for more than half of the country’s inflation.

In 2020 first quarter, Liberia, Ethiopia, Angola, Sierra Leone, Zambia, Rwanda and Nigeria recorded inflation rates over 10%; in particular 23.6% in Liberia and 21% in Ethiopia.

A number of countries have experienced rising inflation rates during the pandemic. Timely production and dissemination of price statistics would help detect ensuing macroeconomic instability among countries hence able to suggest possible policy interventions.
 

Price levels

Change in exchange rate and CPI in African countries, from December 2018 to December 2019
 

The chart above shows that except for Nigeria, some countries had low inflation, while a few even negative inflation

African countries and real GDP growth in 2019​

Inflation and GDP are important economic indicators and although there is a relationship, it usually difficult to clearly define it. There was high inflation associated with negative growth in Zimbabwe. We also observe negative real GDP growth rates with high inflation in Angola, Liberia, and Sudan; as well as high growth rates with high inflation in Ethiopia and South Sudan. During the many countries experienced moderate inflation rates and growth rates 2019.

At the regional economic community level, while inflation in AMU and EAC remained relatively low especially since 2019, moderately high inflation has been persistent in ECCAS and ECOWAS. In CEN-SAD inflation reached its highest level of inflation in the first quarter of 2020. Inflation rates have been rising in the recent years and hit record high levels in the first quarter of 2020 for COMESA, IGAD, and SADC. Timely production and dissemination of price statistics help detect areas that require policy intervention. During the pandemic, a number of countries have experienced high inflation levels. 

On the Continental level, from 2000 to 2007, Africa’s regional inflation was close to that of the average of emerging market and developing economies, and both groups had much higher inflation than the world average. However, since 2008, Africa’s regional inflation rates have been persistently higher than that of the emerging market and developing economies. There was a surge in inflation of Africa during 2016-17. As a result, the gap became wider during this period. From 2018 to 2019, there was slight regression of Africa’s inflation. The gap was narrowed in recent two years despite inflation level remaining high.