Weekly inflation went from 0.36 to 1.54 per cent in four weeks as imported items repriced first.

By Kanisa Magazine · July 2023

In the first three weeks of July 2023, Kinshasa’s retail prices rose 3.7 per cent, more than the whole of the previous month. The BCC’s weekly index recorded 0.36 per cent in the week to 23 June, 0.64 per cent in the first week of July and then 1.49 and 1.54 per cent in the next two. The shock arrived within days of the franc’s sharpest slide, and it was not spread evenly across the basket.

The index level moved from 211.19 on 23 June to 220.00 on 21 July, according to the BCC statistical digest of 26 July. By that date the capital’s prices stood about 23 per cent above December and about 32 per cent above a year earlier.

Which prices jumped

Transport, medicine and meat led; communications and bread hardly moved.

Between 23 June and 21 July the BCC’s group indices tell a clear story. Transport rose 7.2 per cent, health 7.0 per cent, meat 7.7 per cent, alcoholic drinks and tobacco 5.4 per cent, vegetables 5.3 per cent and rents 4.5 per cent. Communications were flat at 229.7. Bread and cereals rose only 1.3 per cent and fish 1.1 per cent.

The contribution chart for the third week of July reshuffles the leaders. Food still accounted for 56.27 per cent of the weekly rise, but that was down from 65.11 per cent in late June, while health jumped to 10.26 per cent from under 2 per cent and transport edged up to 13.56 per cent. Housing, water and energy supplied 10.10 per cent. A weekly rise that had been a food story in June became a food, health and transport story in July.

How the exchange rate reached the shelf

Imported items repriced in about a week; administered and locally made items did not.

Governor Malangu Kabedi Mbuyi told the Council of Ministers on 7 July that weekly inflation in the last week of June had reached 0.59 per cent against 0.24 per cent the week before, and that the indicative rate of CDF 2,411 per dollar was trending weaker, with the parallel rate at CDF 2,427.5. She said the central bank’s 19 June measures were meant to reduce pressure from excess liquidity on prices and the exchange rate. Imported medicines, spare parts, fuel-linked transport and frozen protein are priced off the dollar; a pharmacist restocking on Monday faces a different replacement cost by Friday.

Mid-month the Kinshasa parallel quote touched CDF 2,635 in the week to 14 July. The weekly index then printed 1.49 and 1.54 per cent. That lag of roughly a week from the dollar quote to the price tag is the core mechanism, and it also explains why bread, made largely from flour already in warehouses, and communications, billed in bundles with fixed tariffs, trailed.

The state’s own response

Ministers proposed targeting dollar supply at the goods households buy most.

On 28 July, Vital Kamerhe, the Vice-Prime Minister for the National Economy, urged the Council of Ministers to have the central bank set up special foreign-currency counters for importers of mass-consumption goods, limited to the volumes their import licences allow, alongside faster delivery of the 145-territory development programme. The idea is to separate staple importers from speculators in the queue for dollars, and so to shorten the pass-through lag for the prices that matter most to a household budget.

What this means for sellers and wage setters

Replacement-cost pricing is now a weekly task, and cost-of-living clauses are overdue.

A pharmacy chain, a transport operator or a meat importer that priced on historic cost in June was selling below replacement cost by the third week of July. Weekly repricing against the parallel quote, with a buffer for the following week, protects margin better than monthly list updates. For employers, the indices point to a transport and health squeeze on staff that justify targeted allowances, because commuting and medicine cost far more than the headline average suggests.

The decisive number to watch is the gap between the indicative and parallel dollar rates. When it narrows, the weekly index tends to cool; the next digests will show whether August’s measures achieved that.