Cassava rose 5.5 per cent in four weeks while the national index rose 2.7 per cent.

By Kanisa Magazine · August 2023

Congo’s national consumer price index rose 0.716 per cent in the week of 21 to 27 August 2023, the Banque Centrale du Congo reports, and 21.6 per cent since the last week of December. That single figure hides a basket in which cassava, potatoes and bananas, cooking fuels and medicines climbed several times faster than rents or school fees, and a map in which Mbuji-Mayi’s prices ran nearly twelve times the pace of Bandundu’s.

The digest of 30 August is the best view available of household pressure, because it publishes the index by item and by city. Read at that level, the August signal is less about one inflation rate than about who pays it.

The items doing the damage

Starchy staples, drinks inputs and fuels rose three to six per cent in four weeks, while the headline index rose 2.7 per cent.

The national index went from 172.481 in the week to 30 July to 177.081 in the week to 27 August, a rise of 2.7 per cent. Within it, the group for potatoes, cassava, other tubers and bananas went from 282.770 to 298.259, up 5.5 per cent. Coffee, tea and cocoa products rose 5.8 per cent. Electricity, gas and other fuels rose 3.2 per cent, vegetables 4.2 per cent and medicines 3.0 per cent.

Against those, rents rose 1.1 per cent, transport services 1.2 per cent and teaching fees 0.3 per cent. Households shifted spending toward the cheapest calories, and those are the ones whose prices rose fastest.

A country with several inflation rates

Year-to-date price growth ran from 46 per cent in Mbuji-Mayi to under 4 per cent in Mbandaka.

The BCC’s city series show Kinshasa up 29.6 per cent since December, Lubumbashi 25.3 per cent, Matadi 24.8 per cent, Goma 10.7 per cent, Bandundu 4.0 per cent and Mbandaka 3.8 per cent. Mbuji-Mayi leads at 46.4 per cent. Weekly moves in the last week were 0.97 per cent in Kinshasa, 1.00 per cent in Goma and 0.13 per cent in Mbandaka.

The spread follows distance from the dollar. Kinshasa, Matadi and Lubumbashi sit on import and mining corridors where prices follow the exchange rate within days. Mbandaka and Bandundu trade in smaller volumes, with sticky local pricing and thinner dollar use, so the same shock arrives slowly.

How the franc reaches the shelf

A cheaper franc reprices imported inputs first and local foods second, through transport and trader credit.

Over the same eight months the indicative rate slid from 2,016.57 to 2,465.66 francs for a dollar. The BCC had already lifted the reserve requirement on franc deposits from zero to 10 per cent on 19 June, when monthly depreciation had slowed to 0.8 per cent from 3.6 per cent in January and February. Pressure returned in July, and the digest’s national month-end rate for July was 4.2 per cent, and August’s cumulative rate stood at 2.7 per cent after four weeks.

The mechanism is the importer’s cost sheet. Wheat, rice, fuel, medicines and packaging are bought in dollars, then moved by road at fuel prices that themselves track the dollar. A 22 per cent weaker franc becomes a smaller rise at the market stall because traders absorb part of it, and a larger one in provinces where goods change hands several times.

The policy response and its limits

A 25 per cent policy rate addresses franc liquidity, not the supply of cassava.

On 8 August the central bank raised its key rate from 11 to 25 per cent at an extraordinary committee, and Radio Okapi reported that it aimed to neutralise excess liquidity. Tighter money can slow the exchange-rate leg of inflation. It cannot lower the price of tubers in Mbuji-Mayi, where roads, transporters and local harvests set the cost.

What retailers and manufacturers should do

Set prices by city and by basket item, and watch tubers and fuels as the leading indicators.

A national price list built on a single inflation figure will under-price in Mbuji-Mayi and Kinshasa and over-price in Bandundu. Wholesalers and consumer-goods makers should index contracts to the city series, shorten price-validity windows in the high-inflation cities to two weeks, and track the tuber and fuel sub-indices, which moved first. The numbers to watch in the next digests are the weekly national rate, which has held between 0.6 and 0.9 per cent for five weeks, and the gap between Kinshasa and everywhere else.