Half of the fall from 15.5 per cent is base effect; the pressure sits in services and a frozen fuel price.

By Kanisa Magazine · August 2021

Congolese consumer-price inflation fell to 6.05 per cent year on year by 20 August, from 15.52 per cent at the end of December, according to the BCC’s statistical digest of 25 August. About half of that fall is arithmetic: August 2020 had been an expensive month and August 2021 was not. The pressure that remains sits in the fuel and service prices that headline averages hide, and in one pump price that has not moved for a year.

For a household, 6 per cent is a manageable number. For a business, the second-order effects of what is sitting underneath it are the story.

A base effect, then a slower week

Prices rose 0.43 per cent in August 2020 and about 0.19 per cent so far in August 2021.

The digest’s weekly index for Kinshasa shows increases of 0.20, 0.05, 0.13 and 0.05 per cent over the four weeks of August 2020, then 0.25 per cent in the first week of September that year. In August 2021 the weekly moves were 0.074, 0.090 and 0.022 per cent. When last year’s large weeks drop out of the twelve-month window and small ones replace them, the annual rate falls without any one price falling.

Governor Malangu Kabedi told ministers, as Zoom Eco reported on 28 August, that cumulative inflation for the year stood at 2.98 per cent against 13.48 per cent a year earlier, with a year-end projection of 4.74 per cent against 15.76 per cent at the end of 2020.

Where the pressure is concentrated

Restaurants and transport ran well above the headline in the first two weeks of August.

Inside the weekly basket, the spread is wide. In the first three weeks of August, the restaurants and hotels group moved between 0.137 and 0.169 per cent a week, roughly double the general index. Transport rose 0.101 and 0.153 per cent in the first two weeks, and health 0.156 per cent in the first. Food and non-alcoholic drinks moved 0.069 and 0.100 per cent, then almost nothing in the third week.

A weekly 0.07 per cent compounds to about 3.7 per cent a year, while 0.15 per cent compounds to about 8 per cent. A family eating out or paying for care is therefore facing a different inflation rate from one cooking at home, and the BCC’s real policy rate of 2.45 per cent is measured against the lower headline figure.

The pump price is the catch-up risk

Kinshasa petrol is still CDF 1,995 a litre, the level set in August 2020.

The BCC’s fuel table lists the western zone, which supplies Kinshasa, at CDF 1,995 for petrol and CDF 1,985 for diesel in the 28 July 2021 revision, unchanged from August 2020. Brent crude, meanwhile, closed the BCC’s table at US$65.08 on 20 August from US$51.52 at the start of the year. In the south, Zoom Eco recorded a rise in petrol from CDF 1,820 to CDF 2,100 in the same July revision.

The mechanism is administrative: the ministry sets prices from a cost structure that includes the import price and the franc rate. A stable franc, 1.0 per cent weaker than in December, keeps the exchange-rate input flat. Brent does not. If western prices are revised, the move is a step, not a drift, and it feeds transport, food distribution and the restaurant group.

What a business does with a falling headline

Budget wage settlements and price lists on 6 per cent, but stress them at a fuel step.

For the remaining months, assume inflation ends the year near the governor’s 4.74 per cent and plan wage reviews against that. Then run a single stress case: a western-zone petrol increase of 10 per cent, which adds roughly CDF 200 a litre. Distribution-heavy businesses such as brewers and wholesalers should add a fuel clause to supply contracts now, while the headline is calm and counterparties agree.