Inflation, the persistent rise in the general price level of goods and services, remains a pressing concern for many African economies. While recent data suggests a slowdown in inflationary pressures across the continent into the next year, challenges persist, particularly in countries heavily reliant on single commodity exports and grappling with environmental and economic vulnerabilities.
Nigeria
Nigeria, Africa’s largest economy, continues to grapple with high inflation rates. The Reuters poll indicates that inflation is expected to rise to 29.1% this year, reflecting a concerning increase from last year’s average of 24.5%. However, there is a glimmer of hope as forecasts suggest a moderation to 17.2% next year.
The Nigerian central bank has responded decisively to these inflationary pressures. Governor Olayemi Cardoso implemented significant monetary policy tightening, raising the policy rate by 200 basis points to 24.75%. Despite these measures, the pace of inflation decline is expected to be gradual, attributed partly to persistent challenges in the agricultural sector. Floods, rising fertilizer costs, and insecurity in food-producing regions continue to fuel elevated food prices, a significant component of Nigeria’s consumer price index (CPI) basket.
Ghana
Ghana, another key player in the region, witnessed soaring inflation rates last year, averaging at 40.3%. However, there are positive signals ahead as forecasts indicate a substantial slowdown to 18.7% this year and further to 12.1% in 2025. This trajectory suggests a concerted effort by Ghanaian authorities to rein in inflationary pressures and stabilize the economy.
Angola and Zambia
Angola and Zambia, both reliant on commodity exports, are expected to experience varying degrees of inflationary moderation. Angola, grappling with inflation rates of 23.7% this year, is forecasted to see a notable slowdown to 13.6% next year. Meanwhile, Zambia’s inflation is expected to ease to 8.0% in 2025 from 12.3% this year. These projections underscore the importance of economic diversification and prudent fiscal management in mitigating inflationary risks in commodity-dependent economies.
Kenya
Kenya stands out as one of the regional leaders in inflation management. Despite facing inflationary pressures, the country is expected to maintain relatively tame inflation rates, with forecasts indicating a decline to 5.6% next year from 6.3% this year. Improved food prices and currency appreciation have contributed to this favorable outlook, underscoring the importance of sound macroeconomic policies in maintaining price stability.
South Africa
In South Africa, recent data suggests a modest slowdown in inflation rates, with forecasts indicating a decline to 4.6% next year from 5.1% this year. This trend reflects ongoing efforts to stabilize the economy and foster resilience amid external shocks and domestic challenges.
While the outlook for inflation in key African economies appears to be improving, significant challenges remain. The persistence of high inflation rates in some countries underscores the need for targeted policy interventions to address structural vulnerabilities, particularly in the agricultural sector and currency stability. Moreover, economic diversification and prudent fiscal management will be essential in reducing reliance on single-commodity exports and fostering long-term stability. As African economies navigate these challenges, concerted efforts by policymakers and stakeholders will be crucial in building resilience and fostering sustainable economic growth.
