Inflation

Inflation in Africa (excluding Zimbabwe) accelerated to the double-digit level of 11.6 per cent in 2008, up sharply from 7.5 per cent in 2007, largely due to the impact of higher energy (mostly hydrocarbons), fertiliser and international food prices. This surge in inflation affected both net oil exporters and net oil importers although, as might be expected, the increase in inflation was larger by about 1 per cent for the latter. This group, (excluding Zimbabwe) experienced an upward surge of inflation from 7.9 per cent in 2007 to 13.5 per cent in 2008. In 2009, inflation in this group of countries is expected to return to about the same level as in 2006, and to fall further in 2010. In oil-exporting countries, inflation, which increased by less, is expected to fall more slowly. The number of African countries (excluding Zimbabwe) with double-digit inflation increased from only 6 in 2007 to 28 in 2008. This number will decline to 11 in 2009 and then to 6 in 2010. Even CFA franc countries, which have had historically low rates, experienced inflation in the high single digits, thus increasing the differential between them and the Euro zone considerably. The forecasts assume that the authorities will not need to tighten monetary policy significantly since commodity prices have already fallen sharply and domestic demand has weakened along with the deterioration of the economic outlook due to the international financial and economic crisis.