Angola: Inflation continues to dip, but remains too high for comfort
June 14, 2017
Consumer prices in the province of Luanda rose 1.76% in May from the previous month, down from April’s 2.00%. According to the National Statistical Institute (Instituto Nacional de Estatística), May’s figure reflected a broad-based increase in prices, with a particularly significant uptick in prices for health, household equipment, alcoholic beverages and tobacco, and clothing and footwear.
Inflation dropped from 36.3% in April to 34.1% in May, the lowest rate since June 2016 and marking the fifth consecutive monthly decline. Recent data suggests the country is slowly getting a grip on inflation, which had trended upwards uninterruptedly from 2015 until the end of last year, as the effects of higher fuel prices and the depreciation of the kwanza observed last year finally start to lessen. In addition, the National Bank of Angola’s (BNA) significant tightening cycle engaged in 2016 seems to be bearing fruit. Inflationary pressures nevertheless remain elevated, denting consumers’ purchasing power and whipping up economic uncertainty, and matters aren’t being helped by the parallel exchange rate, which is significantly depreciated compared to the fixed rate set by the Central Bank.
Author: Oliver Reynolds, Economist