Moz currency weakness driving inflation higher

Headline inflation in Mozambique reached 2.3% year-on-year in August from 1.5% in July, having peaked this year at 4.0% in February.

“Non- food inflation,” said Standard Bank economist, Samantha Singh, “continued to grind higher - reaching 2.44% in August from 2.4% the previous month. More pronounced was the jump in food inflation to 2.2% from 0.6%. Most categories of the non-food component of the inflation basket showed increases with ‘Transport’ increasing by 2.2% from 1.5%.

“We expect upward pressure on food inflation over the next six months or so to persist.”

The bank’s expectations over the next couple of months are still biased toward upward pressure on USD/MZN due to strong importer demand amid sparse left hand side flows at this stage.

In the year to date, MZN has depreciated against USD by about 24.3%.

Source: Standard Bank