Fuel queues, a second pump-price rise and a negative real policy rate set the September tone.

By Kanisa Magazine · September 2022

Congo’s consumer prices were rising at 11.16 per cent a year in the week to 23 September, according to the monetary table of the BCC’s weekly statistical digest, roughly double the 5.38 per cent shown for the end of 2021. The same digest’s price tables put annual inflation at 10.4 per cent nationally and 13.0 per cent in Kinshasa. The policy rate has stayed at 7.5 per cent all the while, so the central bank’s own table shows a real policy rate of minus 3.66 per cent.

This is not a currency story. The BCC’s indicative rate stood at 2,012.81 francs to the dollar on 23 September, against 1,999.97 at the end of last year, a slide of well under one per cent. The pressure is arriving through the pump, the market stall and the minibus fare, which is where a household meets an imported price first.

Ten days of empty forecourts

A fuel shortage left a visible mark on the transport line of the index.

Kinshasa ran short of petrol and diesel in the first week of September. Queues built at stations from Monday 5 September, and on 9 September the hydrocarbons ministry promised deliveries of 1,300 cubic metres a day, up from 660 and 850 on the days before, with a vessel carrying 28,000 tonnes of petrol due on 11 September. The BCC’s Kinshasa index records the effect. Transport prices rose 1.544 per cent in the second week of September, against 0.199 per cent the week after, while the general index moved 0.337 and then 0.304 per cent.

Then the posted price moved. On 16 September the Ministry of National Economy revised pump prices upward in every supply zone, the second revision since July. In the west zone, which includes Kinshasa, petrol went to 2,695 francs a litre and diesel to 2,685, about US$1.34 at the indicative rate. The BCC’s fuel table shows western petrol at 2,095 francs on 26 January, so the pump price has climbed by roughly 29 per cent in under nine months.

How a pump price becomes a food price

In a dollarised economy with a steady franc, diesel is the transmission belt.

Fuel is priced by a ministerial structure built on import parity. When freight is dear and cargoes arrive late, the structure rises and shortages let minibus and taxi operators reprice in cash on the spot. The same trucks and vans then carry maize flour, cassava, fish and cement, so the cost reaches the food line a few weeks behind the transport line. Weekly food inflation in Kinshasa ran at 0.40 per cent in the first week of September and 0.28 per cent in the fourth, each of which would compound to more than 15 per cent a year if sustained.

That arithmetic explains why a modest weekly figure matters. The annual rate of 11.16 per cent still understates the speed at which this month’s prices are being set, because the base period includes the quiet first half of the year.

A policy rate that no longer bites

Savers in francs are paying for the gap between 7.5 per cent and inflation.

The BCC lowered its policy rate steadily after the 2020 shock, to 7.5 per cent in early 2022, when the committee was projecting inflation near five per cent. Its digest now shows banks paying 5.08 per cent on franc deposits and charging 23.33 per cent nominal on franc loans. A depositor loses about six points of purchasing power a year, while a borrower still faces a heavy rate even though the inflation-adjusted cost has fallen.

The BCC’s own bill stock was only 162 million francs in the latest table, a rounding error against bank balances at the central bank of close to 2.8 trillion. The tool for mopping up liquidity is thin, and the policy rate has not moved to follow prices.

What a business should do now

Price lists, transport contracts and wage reviews all need a September reset.

Firms that quote in francs on 30-day terms are absorbing a real cost increase of around one per cent every month. Importers who quote in dollars are less exposed on the exchange rate but not on logistics. The practical steps are plain. Add a fuel clause to haulage and delivery contracts, shorten quotation validity to two weeks for goods that travel by road, and review staff transport allowances before the next payroll rather than after it.

For readers watching the central bank, the next committee meeting is the test. A real rate near minus four per cent leaves little room to hold the line at 7.5, and the weekly digest will show quickly whether the pump price increase has spread beyond transport.