Weekly rises cooled, but a low 2022 base pushed the national annual rate higher.

By Kanisa Magazine · February 2023

Congo’s weekly price rises cooled in February, yet annual inflation kept climbing. On the Banque Centrale du Congo’s national index, prices in the week to 19 February stood 14.4 per cent higher than twelve months before, against 13.4 per cent in the third week of January. In Kinshasa the annual rate reached 17.4 per cent. The BCC’s own annualised projection for the national index fell from 41.9 to 27.6 per cent over the same weeks.

Both statements are true because annual inflation measures this year’s price rises against last year’s. The comparison is now against early-2022 weeks that added very little, so even a slower pace of increase widens the gap.

The arithmetic of the base

A year ago the same week added about 0.08 per cent; this year it added 0.45.

In the week to 19 February the national index rose 0.448 per cent. Annual inflation rose from 14.021 to 14.441 per cent in that week. Working backwards, the same week in 2022 added only about 0.08 per cent. The franc was then close to CDF 2,000 per dollar, and the 2022 weeks leave a low base.

Cumulative inflation for 2023 stood at 3.33 per cent nationally after seven weeks and at 3.90 per cent in Kinshasa. Each week that adds more than the 2022 equivalent pushes the annual rate higher, and the 2022 weeks were small. Households and employers should expect the annual figure to keep rising for some weeks, even if weekly rates ease further.

Cassava, not the dollar

Domestic staples led Kinshasa’s rise while the franc stayed still.

The franc moved only 0.17 per cent in February against the dollar on the BCC’s indicative rate, so imports are not the obvious culprit. The fastest riser in Kinshasa was domestic. Potatoes, cassava, other tubers and plantain climbed 5.2 per cent between the weeks to 29 January and 19 February, from 331.1 to 348.2 on the index with December 2018 at 100. Sugar rose 2.9 per cent, medicines 2.8 per cent and transport services 2.7 per cent. Nationally, tubers rose 2.6 per cent and food overall 1.1 per cent.

A staple that travels by road and river and rises while the exchange rate sits still points to a supply chain problem rather than a currency one. The BCC’s numbers do not say which link is under strain, and the digest cannot separate transport costs from harvest or trade-route effects. But it is a different diagnosis from the dollar story that dominated 2022 coverage.

Twenty points between cities

Mbuji-Mayi’s annual rate was 24.8 per cent; Mbandaka’s was 5.1 per cent.

Annual inflation in the week to 19 February was 24.8 per cent in Mbuji-Mayi, 21.2 per cent in Lubumbashi, 19.7 per cent in Goma and 17.4 per cent in Kinshasa. At the other end sat Kisangani at 10.0 per cent, Matadi at 7.4 per cent, Bandundu at 7.0 per cent and Mbandaka at 5.1 per cent. A national average of 14.4 per cent describes almost nobody, and a firm that budgets on it will be wrong in most of the cities where it trades.

In Goma the picture overlaps with the conflict. The M23 movement’s capture of Kitshanga in North Kivu, reported on 1 February, followed months of fighting that had displaced more than 450,000 people, according to Al Jazeera’s account. Goma’s annual rate of 19.7 per cent was above the national figure, though its three-week rise in food prices, at 1.3 per cent, was close to the national 1.1 per cent. Energy items there rose 2.5 per cent.

Pricing for a split country

Use city-level indices, not the national headline, for wages and price lists.

The World Bank’s October 2022 economic update said that poverty reduction has been elusive despite strong growth, and the BCC’s data on prices show a related fact: the burden of price rises is not shared equally. For a firm that operates in several cities, a single national price increase will be too high in Mbandaka and too low in Mbuji-Mayi.

The practical step is to index wage reviews and supplier contracts to the local weekly series, which the BCC publishes for eleven cities, and to review price lists quarterly rather than annually. Retailers with Kinshasa stores should plan for at least 17 per cent annual cost inflation through March. Those selling staples in provincial cities should watch the transport line first.