Kinshasa’s calm headline inflation hides a basket in which cash-bought items are already rising.

By Kanisa Magazine · January 2022

Kinshasa’s household price index barely moved in January, yet the pieces of the basket moved very differently. Meat prices climbed 5.4 per cent across the five weekly readings in the Banque Centrale du Congo’s digest, electricity, gas and other fuels rose 2.2 per cent, and communications rose 2.6 per cent. Bread and cereals stood still at 162.8 on the BCC index.

The result was weekly headline inflation of just 0.12 to 0.20 per cent, and year-on-year inflation of 5.2 per cent. That calm hides a mix that matters for anyone who sells to households: the items that are rising are the ones bought with cash and little warning, while the staple that anchors the budget is flat for now.

The January readings

Five weekly prints, all between 0.12 and 0.20 per cent, added to a year-on-year rate of 5.2 per cent.

The BCC digest shows weekly changes of 0.204, 0.169, 0.181, 0.117 and 0.140 per cent for the capital’s general index. The BCC’s annualised projection of the year’s cumulative inflation stood at 8.2 per cent, above the 5.2 per cent measured against a year earlier. Its policy rate was 7.5 per cent and the real policy rate was positive, so the central bank had room to stay steady.

Other components were quieter but not still. Hospital services are the outlier within health, while rents did not move at all and stood at 125.8 across the whole period. Clothing and footwear crept up by about 0.2 per cent. A basket in which rent is frozen and food is nearly flat can still produce a monthly feel of price pressure, because the visible moves are in items people buy weekly.

Mechanism: weights decide what matters

A price’s contribution to inflation is its weight in the basket times its move, so food dominates even when it rises slowly.

At the 21 January cut-off the BCC attributed 61.0 per cent of inflation to food and non-alcoholic drinks, 15.6 per cent to housing, water, electricity and gas, and 5.7 per cent to communications. Food is the biggest weight, so even the slow 0.7 per cent rise in the food index from 163.2 to 164.3 adds more than the faster move in a small component. Meat, up from 168.1 to 177.2, is the exception: a fast mover inside the heavy block. The flat bread and cereals line, at 162.8, kept the total down.

What the household sees

Hospital services rose 2.1 per cent, phone costs 2.6 per cent and fuel for cooking 2.2 per cent: bills that cannot be skipped.

The World Bank’s partnership framework notes that poverty in Kinshasa rose from 52.8 to 64.8 per cent between 2012 and 2018, largely because high inflation eroded purchasing power. Households there know what a price spike costs. In January the index for hospital services moved from 240.3 to 245.4, and cooking fuel and power rose too. Staples did not. FEWS NET’s January bulletin reminds readers that maize and cassava anchor the diet, with fuel prices and road quality shaping what they cost in the east.

What a retailer or lender should do

Watch the bread and cereals line: it is the one that cannot stay flat if import costs rise.

For a food retailer, the January mix argues for protecting margin on protein and fresh produce, where prices are already moving, and for resisting a general price rise while cereals are stable. For a lender to households, the cash-bought items that are rising are the ones that crowd out repayments first. The decisive signal is the cereals index. Congo imports much of its maize, and a rise in that single line would turn a 5.2 per cent inflation rate into a food-led squeeze. Until it moves, price selectively and keep stock cover short.