Cameroon finds itself in the economic spotlight as inflation rates persist above the Cemac threshold, standing at an average of 7.5% in November 2023, as revealed by the national statistics agency INS. While this figure is a slight improvement from October’s 7.7%, it remains more than double the 3% threshold tolerated in the Cemac.
In this article, we delve into the details of Cameroon’s inflation challenges, exploring the factors at play and the government’s strategies for the year ahead.
Current Inflation Landscape:
As of November 2023, Cameroon grapples with persistent inflation rates above the community norm in 9 out of 10 regions, with Bertoua in the East recording the highest rate at 8.9%. Even the regional capital with the lowest rate, Bamenda in the Northwest, stands at 6.1%, surpassing the Cemac threshold. INS attributes this inflation mainly to an 11.6% increase in food product prices, a 13.8% rise in transportation costs, and a 7.7% increase in the prices of furniture, household items, and everyday maintenance products.
Shifts in Food Inflation:
Notably, food inflation has decreased by 0.4% during the review period. This decline is attributed to decreases in the prices of bread and cereals, fish and seafood, oils and fats, as well as vegetables. However, meat and fruit prices experienced increases of 0.6% and 1.9%, respectively. Non-food products saw a decrease only in alcoholic beverages, tobacco, and narcotics (-0.1%).
Government’s Anticipation and Response:
In the 2024 budget, the Cameroonian government envisions a decrease in inflation to 4% next year, compared to the expected 6.7% at the end of December 2023. Despite this positive outlook, the rate remains above the community threshold. In response to the inflationary situation, the Bank of Central African States (BEAC) has implemented measures to tighten liquidity in banks. These measures include repeated increases in main policy rates, suspension of liquidity injection operations into the CEMAC banking system, and intensified liquidity absorption operations from banks.
Understanding the Complex Origins of Inflation:
While the BEAC acknowledges the need for measures to curb inflation, it also recognizes that only 20% of inflation is of monetary origin. This insight emphasizes the complexity of the inflation challenge, indicating that various factors beyond monetary policies contribute to the prevailing economic conditions.
As Cameroon grapples with inflation rates persisting above the Cemac threshold, the government and financial institutions are actively engaged in strategies to address the situation. The detailed analysis of food and non-food inflation provides a nuanced understanding of the economic landscape. While the 2024 budget holds optimism for a reduction in inflation, the multifaceted nature of the issue underscores the importance of holistic approaches. Cameroon’s journey to stabilizing inflation serves as a dynamic case study in navigating economic challenges.