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| File photo: Banco de Moçambique |
The Bank of Mozambique estimates that annual inflation will continue to slow down in the coming months, reflecting the recent decision to exempt some basic products from VAT and reduce toll charges by up to 60%.
“In the short term, the trend towards a slowdown in annual inflation is expected to continue, reflecting the impact of the VAT exemption on basic products (sugar, cooking oil and soap), the downward adjustment of water and toll charges and the fall in food prices on the international market, in a context of stability of the metical,” says the Economic Situation and Inflation Outlook report, consulted today by Lusa.
The document also points out that the usual survey of economic agents “corroborates the prospects of a slowdown in annual inflation”, since the macroeconomic expectations of economic agents revealed in the May study “point to an annual inflation of 4.90% in December 2025, which represents a downward revision of 3 basis points compared to the expectations disclosed in the April survey”.
“However, considerable risks and uncertainties persist, mainly of an internal nature, which impose challenges on maintaining this scenario, in particular the impacts of the growing worsening of the fiscal situation, the uncertainty regarding the speed of recovery of productive capacity and supply of goods and services, as well as the effects of climate shocks,” adds the report.
Prices in Mozambique suffered deflation in April, falling by 0.38%, influenced by the food sector, with year-on-year inflation falling to 3.99%, according to data from the National Statistics Institute (INE) previously reported by Lusa.
The Consumer Price Index (CPI) for April from the INE reports that Mozambique “registered a fall in prices of around 0.38%” compared to March (a rise of 0.06%), in which the food and non-alcoholic beverages sector stood out, contributing 0.54 negative percentage points to the total monthly variation.
This is the fifth deflation in prices in Mozambique in the last year, and reverses a cycle of seven consecutive months of increases. The CPI recorded a fall in prices of 0.11% in August, 0.05% in July, 0.21% in June and 0.38% in May, 2024.
The INE also states that, when compared to 2024, the CPI indicates a year-on-year price increase in April of 3.99% (4.77% at the end of March), influenced mainly by the food and non-alcoholic beverages and restaurants, hotels, cafes and similar divisions, which increased in one year by 8.79% and 7.18%, respectively.
Accumulated inflation for 2024, according to previous data from the INE, stood at 4.15%, compared to 5.3% in 2023, but below the peak of almost 13% reached in July, 2022.
The government expects Mozambique to close 2025 with inflation of around 7%.
Source: Lusa