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July 2022 SSA Inflation Update - Broad-based price pressures hit SSA economies

Broad-based price pressures hit SSA economies
Since the Russia-Ukraine war began in February, consumer wallets have been battered in Africa, as inflation rises to elevated levels. Of the top 10 economies in Africa, 8 recorded higher inflation in the month of July.
 
Ghana leads the pack with record 31.7% y/y print
Across our coverage economies, Ghana has been the worst hit by inflationary pressures. Edging north to 31.7% y/y, inflation has surged for the 14th consecutive month in Ghana. Both food and core inflation remain at elevated levels of 32.3% y/y and 31.3% y/y respectively. The main driver of the upsurge is elevated energy prices as transport & fuels inflation soared above 40%, underscoring the passthrough from a weaker Cedi and high gasoline prices. To curb inflationary pressures, the apex bank raised its benchmark rate by 300bps to 22% at an emergency meeting. Beyond this, inflationary pressures are expected to persist in the near term, despite the soothing impact of a $750 million loan inflow from the African Export-Import Bank (Afreximbank) on the Ghanaian Cedi.

Currency appreciation underpin disinflation in Angola    
Although inflation remains relatively high at 21.4% y/y in Angola, inflation has been on the downtrend since February 2022, the very month Ukraine was invaded. Angola was insulated from the Russia-Ukraine war due to its net-oil exporting status, which boded well for its local currency. The Angolan Kwanza has appreciated by over 20% year-to-date, riding on the back of high oil prices. Further disinflation is expected in the near term, as oil prices remain high.

Kenya’s inflation edges to 5-year high
Inflation surged to 8.3% y/y in July. The rise in inflation was mainly due to an increase in prices of commodities under food and non-alcoholic beverages (15.3%); transport (7.0%) and housing, water, electricity, gas and other fuels (5.6%) between July 2021 and July 2022. In the near term, elevated energy prices and the weakening of the Kenyan Shilling could keep inflation on the uptrend.