Inflation has become a global trend, as the prices of goods have skyrocketed over the past year. Many countries have had their fair share of rising inflation rates, and African countries are unexempted. Though it has been a “different strokes for different folks” story, inflation in Africa has negatively affected the livelihood of Africans, in different parts of the continent.
What Is Inflation?
Inflation is the increase in the price of goods, or the cost of living in a country over a period. It can also be said to be the decrease in purchasing power, as the currency buys considerably less than it did in a prior period.
Most times, the time frame used to measure inflation is a year, comparing the price of goods or cost of living at a point in the previous year to its current. The inflation rate is the percentage increase in the price index, during a given period compared to the price recorded during the period before it.
Rise In Inflation Rate: How Did It Happen?
African countries and high inflation rates, have been familiar with each other for as long as anyone can remember. It is only reasonable to understand that countries with less development are bound to face economic challenges, and rising inflation rates are one of them. Many recent events have led to the rising inflation rates in Africa, but past decisions have also played a part.
Most African countries import more than they export, a policy that gives way to economic challenges like weak exchange rates and high inflation rates.
While African countries battled to reduce inflation and increase economic growth, the COVID-19 pandemic hit globally. The pandemic contributed greatly to the increase in food prices as harvest was minimal, and restrictions enforced to curb the spread of the virus limited trading activities. Apart from agriculture, other sectors of countries’ economies were affected by the pandemic.
Less than two years after the pandemic struck, the Russia-Ukraine war disrupted the recovery process of African countries, if there were any signs of recovery. A conflict between two Eastern Europe countries is not supposed to affect Africa, but it does because both countries are major wheat suppliers to Africa.
According to Statista, the reliance on wheat imports from Russia and Ukraine varies among African countries, but is above 30 percent in most of these countries.
African Countries Affected By High Inflation Rate A lot of African countries are facing rising inflation rates. Some countries hardest hit by high inflation rates in the past year are analyzed. This analysis is from data gathered during Q2 of 2022.
Sudan
Though Sudan’s inflation rate reduced from 236.2% in March 2022, to 220.7% in the following month, Sudan still has the highest inflation rate among African countries. Sudan’s problems with high inflation rates are enormous, considering their 382.8% inflation rate at the end of 2021 was a worldwide high.
Zimbabwe
In May 2022, Zimbabwe had a 132% inflation rate, but it increased to 191% in the next month. Since the start of the Russia-Ukraine war, Zimbabwe has seen a rise in food prices, which has resulted in its rising inflation rate. Though the country may be trying to move on, the future still does not promise so much.
Ghana
Ghana’s inflation rate rose from 27.6% in May 2022, to 29.8% the following month, the highest the country has recorded in 19 years. Also, food inflation in June 2022 was 30.7%, compared to 30.1% in May 2022. The rise in the inflation rate has weakened the purchasing power of Ghanaian citizens.
Nigeria
Africa’s most populous country has witnessed its highest inflation rate in about 65 months, with a 17.71% inflation rate in May 2022, increasing to 18.6% in the next month. The rise in the inflation rate is largely down to the surge in energy prices. It has also caused an increase in transportation costs and food prices across the country.
Rwanda
Rwanda may have one of the fastest-growing economies in Africa, but it also faces an increase in its inflation rate. The country’s inflation rate increased to 16.1% in June of 2022, from 14.8% in the previous month. It is the highest in Rwanda recorded since the end of the first quarter of 2009.
Egypt
Though Egypt witnessed its first inflation rate decrease in seven months, an inflation rate of 13.2% in June 2022, is greater than it was at the same point in 2021. The rise in the country’s inflation rate has been hugely down to the COVID-19 pandemic, which adversely affected the tourism industry. The tourism sector is one of the Egyptian government’s major sources of revenue.
Botswana
The inflation rate in Botswana increased from 11.9% in May 2022, to 12.7% in the next month. This increase resulted from the rising global energy prices and has made citizens spend more on food, transportation, housing, and non-alcoholic beverages.
Kenya
Kenya experienced its highest inflation rate in 58 months, as the 7.1% inflation rate in 2022 threatened to breach the government’s upper limit target. It was a 0.8% increase in the inflation rate, recorded in the month prior. According to the Kenya National Bureau of Statistics (KNBS), this rise in the inflation rate is due to an increase in the prices of food and non-alcoholic beverages, furnishings, and household equipment. Other factors causing this is the rise in the cost of transportation, housing, water, electricity, gas, and other fuels.
South Africa
South Africa’s inflation rate rose from 5.9% in April 2022, to 6.5% in the month that followed. This is the highest inflation rate since January 2017 and surpassed the central bank’s target range.
Fuel is one of the major factors contributing to the rising inflation rate in South Africa. Food, transport, and nonalcoholic beverages are some other factors, accounting for just above half of the country’s inflation rate.
Conclusion: The Bad Days Are Not Yet Over
Though African countries are facing the effects of the increase in inflation rates, they should brace up for more as these rates will get higher. The overall inflation rate in Africa is expected to grow to 12.2% in 2022. This growth is not exclusive to African countries alone, as emerging and developed countries also feel the impact of soaring consumer goods prices. Global issues like the COVID-19 pandemic and the Russia-Ukraine war, have left economies with a lot of supply disruptions to deal with. African countries are in a more difficult position, because they may not have the resources to deal with these crises.
