Prices rose a point in four weeks while the franc stayed still, and bread shrank.

By Kanisa Magazine · April 2022

Congo’s annual inflation reached 7.20 per cent in the week to 20 April 2022, up from 6.01 per cent four weeks earlier and 5.38 per cent at the end of December, according to the Banque Centrale du Congo’s digest of 27 April. In the same weeks the franc barely moved. The prices that rose were prices of things the country buys from abroad, and the clearest case was bread.

Bread tells the household story better than the index does. Kinshasa’s bakers raised prices, cut loaves or did both, and the BCC’s basket recorded only part of it. The gap between the street and the statistic is where businesses should look.

What the digest recorded

Annual inflation climbed 1.2 points in a month, and meat rose faster than any food item.

The year-on-year rate went 6.01, 6.44, 6.72, 7.13 and 7.20 per cent across five consecutive weekly readings from 23 March to 20 April. With the policy rate at 7.5 per cent, the real policy rate fell to 0.30 per cent. The Kinshasa retail index stood at 161.191 for the week of 18 to 24 April, up 1.2 per cent from 159.348 four weeks earlier. The meat sub-index rose from 191.880 to 207.649, an increase of 8.2 per cent, and the electricity, gas and fuels index rose 3.0 per cent.

Food and non-alcoholic drinks supplied 60.55 per cent of overall inflation on 24 April, down from 63.03 per cent a month earlier. Transport contributed 9.38 per cent and health 6.10 per cent. Restaurants and hotels, which gave 0.35 per cent in March, rose to 4.41 per cent, a sign that price pressure was moving into services.

How the loaf shrank

Bakers repriced and reweighed, and an index that tracks price lists does not capture a smaller loaf.

Factuel reported on 9 April that Pain Victoire, one of Kinshasa’s large bakeries, had raised its rectangular loaf from 500 to 750 francs and its larger one from 1,000 to 1,500 francs, discontinued the 200-franc baguette and cut the weight of the 300-franc one, citing the war in Ukraine. DeskEco, two days later, recorded the baguette at 300 francs where it had been 200, with sellers complaining that their commission had not moved. The bakery’s management gave no explanation in that account.

Le Mag described the same week at an artisanal bakery in Ngaliema, where a team leader said it had cut production to five sacks of flour rather than raise prices, because wheat was scarce. A 25-litre can of cooking oil had gone from 83,000 to 103,000 francs, up 24 per cent.

Why the index understates it

The BCC’s bread-and-cereals line rose just 0.5 per cent in the month because it samples listed prices.

The BCC’s Kinshasa index for bread and cereals went from 162.968 at the end of March to 163.840 in the week to 24 April. That is 0.5 per cent against loaf price rises of 50 per cent reported by press for one brand. Two mechanisms explain much of the difference. An index of fixed items records the price of a loaf of an unchanged specification, so a smaller loaf at the same price shows as no change. And a single bakery’s list change moves the average only in proportion to its market share and the sampled outlets.

None of that makes the BCC figure wrong. It makes it a lagging measure of a shock that is arriving at the household first and in the statistics later.

What a business should do with the signal

Budget on the street price, not the index, and secure wheat-based inputs for the second quarter.

Flour-dependent businesses, from bakeries to snack makers, should treat the press reports as the better guide to their costs this quarter. Employers who index wages to the official rate will find staff comparing it with what a loaf costs. A retailer with a weak stock of imported staples should buy forward now, because with the franc steady and real rates near zero the BCC has little room to slow prices through money alone.