Four weeks of BCC data show energy, transport and medicine pulling ahead of food and cereals.

By Kanisa Magazine · November 2022

Congo’s retail prices rose 0.99 per cent in the four weeks to 27 November, and the headline hides where the heat sits. The national index of the Banque Centrale du Congo (BCC) put year-on-year inflation at 9.85 per cent, with the central bank’s summary table reading 10.4 per cent. The lines running well ahead of both were fuel, transport, medicine and starchy staples.

That matters because the BCC’s own contribution chart for Kinshasa in the last week of November splits almost evenly. Food carries 41.9 per cent of the weekly pressure. Housing and energy (14.4), health (15.0) and transport (13.5) together carry 42.9 per cent. The household bill is shaped as much by the pump and the pharmacy as by the market stall.

Five lines that ran ahead of the average

Energy, transport, medicine and tubers rose between 1.4 and 2.3 per cent in four weeks while cereals barely moved.

The BCC’s weekly statistical digest tracks the national index line by line. Across the four readings from 31 October to 27 November, electricity, gas and other fuels climbed 2.33 per cent. Tubers, cassava and bananas gained 1.62 per cent, transport services 1.69, medicines 1.59, dairy and eggs 1.45 and vegetables 1.41. The general index added 0.73 per cent over the same span, in weekly steps of 0.26, 0.27, 0.22 and 0.24 per cent.

Bread and cereals, by contrast, added 0.05 per cent and school fees 0.07. A shopper buying flour saw almost no change. A household that buys cooking fuel, lights a lamp with kerosene and rides a minibus saw the whole of it.

The pump-price staircase

Western-zone petrol was reset five times after January, and kerosene, the poor household’s lamp fuel, rose 44 per cent.

Congo sets fuel prices administratively, zone by zone, through the Ministry of National Economy. The BCC’s table of the official structure shows petrol in the western zone, which includes Kinshasa, at 2,095 francs a litre on 26 January. It then moved to 2,195 in April, 2,345 in May, 2,495 in July and 2,695 on 16 September, a level Radio Okapi reported that month.

The latest step, announced at the end of November, set petrol at 2,855 francs, diesel at 2,845 and kerosene at 2,450. Against January, petrol is up 36 per cent, diesel 36 per cent from 2,085, and kerosene 44 per cent from 1,700.

Each step travels through three channels. Minibus and taxi fares reprice within days and show up in the transport line. Generator and cooking fuel feed the energy line. Everything that moves by road carries the extra cost in its delivery margin, which is why tubers and vegetables rose faster than imported cereals.

The franc was not the culprit

The official rate moved 0.7 per cent in 2022, so imported inflation arrived through dollar prices and the pump.

The BCC’s indicative rate was 1,999.97 francs to the dollar at the end of 2021 and 2,013.97 on 25 November, a drift of 0.7 per cent. The monetary policy committee put official depreciation at 0.69 per cent and parallel-market depreciation at 2.52 per cent when it raised its rate on 24 November, according to Zoom Eco.

With the rate close to fixed, the mechanism is simple pass-through. When the dollar price of fuel rises and the exchange rate holds, the franc price rises by the same proportion, and the administered pump price follows in steps rather than all at once.

Policy was still behind the curve

A re-discount rate of 7.5 per cent against inflation near 10 left the real rate at minus 4.7 per cent.

The BCC’s own table puts the real re-discount rate at minus 4.74 per cent on 25 November. The committee lifted the nominal rate from 7.5 to 8.25 per cent the day before, projecting end-year inflation between about 11 and 12.9 per cent. IMF staff said on 18 November that inflation should exceed 12 per cent by December on global food and fuel prices. A policy rate below inflation signals intent more than it restrains prices.

What a business should do with it

Index contracts to the lines that move, not to the average.

A contract that escalates on headline inflation under-recovers for businesses that sit on the fuel line: distributors, generator operators, bus and truck fleets, bakers. Replace the single index clause with three references: the official diesel price, the BCC transport-services line and the food group. Review monthly, because the ministry’s structure has moved every one to three months this year. And price the next revision into any 2023 quote now, before the ministry announces it.