Inflation nears two-year low but remains among fastest in the region in May

Latest reading: Inflation fell to 19.8% in May from April’s 22.2%, marking a near two-year low. Resumed Central Bank intervention in FX markets has supported the kwanza, tempering imported inflation. Domestically, elevated interest rates and improved consumer goods supply have contributed to a continued decline in inflation. That said, the paring back of fuel subsidies likely stemmed the overall decline in inflation and should keep it among the highest in Sub-Saharan Africa ahead. As a result, the trend was eased, with annual average inflation edging down to 26.9% in May from April’s 27.8%. Lastly, consumer prices rose 1.17% over the previous month in May, which was below the 1.34% increase logged in April and marked the lowest result since May 2023.

Panelist insight: Oxford Economics’ Gerrit van Rooyen commented: “Although inflation is starting to lose momentum, we have raised our forecast slightly. [...] The inflation outcome in the first four months of this year was slightly higher than we expected, hence we raised our 2025 forecast marginally. With the kwanza having weakened to over Kz900/$ since H2 2024, disinflation has slowed somewhat at the start of this year. Nevertheless, our view remains that inflation will continue to subside in 2025, thanks to favourable base effects and muted pressure from global commodity prices.”

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