Rising Inflation in Angola: Oxford Economics’ Forecast

Oxford Economics projects a significant rise in Angola’s inflation rate, anticipating it to reach 23% in the current semester.

This increase follows a notable rise in December 2023, when inflation peaked at 20%, the highest since August 2022.

The consultancy links this inflationary trend to the continuous rise in food and beverage prices, partially due to the kwanza’s devaluation in mid-2023.

This devaluation is expected to fuel inflation throughout the year’s first half.

In a detailed analysis, Oxford Economics highlighted a year-on-year inflation increase of 20.0% in December.

This rate accelerated from 18.2% in November compared to the same period in the previous year.

Additionally, there was a month-on-month rise in December (2.4%) compared to November (2.2%).

The weakening of the Angolan currency, the kwanza, has played a significant role in this inflationary trend.

Trading near its lowest value at around 833 kwanzas per dollar, the currency’s depreciation has led to increased food prices.

Furthermore, reduced fuel subsidies have started impacting transportation costs, contributing to the highest inflation rate since August 2022.

Oxford Economics expects the National Bank of Angola to maintain the exchange rate between 830 and 845 kwanzas per dollar until the year’s end.

The consultancy predicts inflation to exceed 23% by the semester’s end due to the impact of the exchange rate on importing consumer goods.

The inflation rate is forecasted to rise from an average of 13.6% in 2023 to 21.3% in 2024.

The National Bank of Angola has been cautious about increasing interest rates since the kwanza’s decline, only raising them by 100 basis points since November.

However, a further increase of 150 basis points is anticipated this semester based on the expectation of continuing inflation and modest economic recovery during this period.

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