BCC weekly data show food and fuel lines moving far faster than the headline in November.

By Kanisa Magazine · November 2021

Congo’s cumulative inflation stood at 4.07 per cent in the second week of November 2021, and the Banque Centrale du Congo expects the year to close near 4.7 per cent, inside a 7 per cent target. That is a long way from the 14 per cent of a year earlier. Underneath the headline, though, two lines in Kinshasa’s price index were moving at several times the pace of the rest.

The aggregate is a weighted average, and in Congo the weights are heavily alimentary. The BCC’s breakdown of contributions to the overall index puts food and non-alcoholic drinks at 64.84 per cent and housing, water and energy at 12.77 per cent. A household sees the food basket and the fuel bill; it does not see the average.

The aggregate and its path

Cumulative inflation climbed from 3.69 to 4.07 per cent in about a month, with no break in the franc.

On 1 November the BCC reported cumulative inflation of 3.69 per cent at the third week of October, according to Zoom Eco. By the second week of November the Governor, Malangu Kabedi, gave 4.071 per cent, with the official franc down 1.37 per cent since January and the parallel rate down 0.90 per cent. The Governor’s briefing also named year-end festive demand as a risk.

The BCC’s weekly table, using the INS year-on-year measure, shows annual inflation at 5.19 per cent on 19 November, against 15.66 per cent at the end of January. Both numbers are correct; they measure different windows.

What Kinshasa’s weekly index shows

Meat and household energy ran well ahead of the average while bread and sugar stood still.

The BCC digest of 24 November tracks Kinshasa retail prices on a base of December 2018. Between the first and third weeks of the month the meat index went from 153.57 to 156.43, up 1.9 per cent, and it rose 1.11 per cent in the final week alone. Electricity, gas and other fuels climbed from 147.92 to 149.53, or 1.1 per cent. The food index as a whole moved 0.3 per cent. Bread and cereals did not move at all, and sugar was flat in the last week.

The city’s general index rose 0.13 per cent in the week, and its annual rate was 5.35 per cent. Those are modest numbers. A restaurant buying beef or a bakery paying for cooking gas was meeting something larger.

Why a stable franc does not flatten every price

The exchange rate disciplines imports; it cannot discipline items priced by supply chains or by the state.

A franc that slid only 1.4 per cent in ten months removes most of the imported-price shock from flour, oil and frozen goods, which explains the flat bread line. It does little for fresh meat, which depends on herd, transport and handling costs, or for energy, where tariffs and administered prices move on their own calendar. The pattern points to supply-side and administered pressure, not currency pass-through, though the digest does not itself give the cause.

The festive-season lever

Government is using imports, not the central bank, to cap the year-end basket.

On 29 November the National Economy Minister, Jean-Marie Kalumba, received several tonnes of frozen horse mackerel at Matadi under a fishing-quota arrangement with Namibia, with the stated aim of supporting importers who apply a fair price, Zoom Eco reported. More cargoes from agreements signed in Namibia and Spain were due. Cheaper protein arriving at the quay can take some pressure off the meat line.

The close: index your contracts to the lines that move

Buy forward on beef and fuel; leave bread alone.

For a Kinshasa food retailer, caterer or manufacturer, the headline rate understates the cost of two inputs. The sensible step before the January price round is to fix supply contracts for meat and cooking fuel at a negotiated band, and to track the BCC’s weekly Kinshasa lines for those two items rather than the average. If the aggregate holds near 5 per cent while those lines keep running at 1 per cent a week, margins, not prices, will absorb the difference.