Food inflation in Sub-Saharan Africa

Inflation is rising around the world. In sub-Saharan Africa, one item is driving the trend more than others: food prices. Food accounts for roughly 40 percent of the region’s consumption basket—a measure of goods and services used to measure consumer price index (CPI) inflation.

Food inflation increased throughout 2019, on average, across 25 countries in the region where monthly food price data are available. After remaining stable around 7–8 per cent (year over year) since the beginning of the pandemic, food inflation started to rise again from April this year to some 10 percent in October. The chart below shows how food inflation is outpacing and contributing to the pick-up in overall consumer price inflation in sub-Saharan Africa, which rose to about 8 percent in October, up from around 5 per cent in 2019. Food items make up around 40 per cent of the consumption basket in sub-Saharan Africa. This explains why high food prices directly impact inflation rates in the region. Apparently, there is a possibility that food inflation could moderate if the pandemic-induced global supply chain disruptions are resolved and commodity prices ease up. Otherwise, food inflation could continue to rise, especially if 'inflation expectations become de-anchored'.

Using available data obtained from some countries in SSA, the IMF found that between 2019 and now, there has been a significant increase in inflation linked directly to higher food prices.

On a global scale, the recent increase in food inflation is attributed to rising oil prices (which raise fertilizer prices and transportation costs), droughts and export restrictions imposed by some major food exporters, and stockpiling in some countries. In addition, pandemic containment measures disrupted production and imports of seeds and fertilizers and caused labor shortages during planting seasons. Importantly, there is diversity across the region—food inflation in Chad is near zero but around 30 percent in Angola. This suggests that domestic factors such as weather and exchange rates are important contributors to food inflation in sub-Saharan African countries.

The outlook is highly uncertain. Food inflation and CPI inflation could moderate if commodity prices ease and pandemic-induced global supply chain disruptions resolve. However, high food inflation could persist if inflation expectations become de-anchored or supply chain disruptions continue.

IMF