CCMUSA – Câmara de Comércio Moçambique USA

Mozambique: Inflation turns into deflation

Inflation in Mozambique has turned to deflation, as the average level of prices in the country fell by 0.6 per cent in May, according to the latest figures released by the National Statistics Institute (INE), based on the consumer price indices for the three largest cities (Maputo, Nampula and Beira).

The May fall in prices means that inflation for the first five months of the year was only 1.14 per cent. Inflation for the entire year (1 June 2019 to 31 May 2020) was 3.02 per cent.

The foodstuffs with the largest reductions in price in May were tomatoes (14.2 per cent) and lettuce (13.3 per cent).

Another factor in the May deflation, never experienced before, was the collapse in the price of private education. Because all schools are closed by government order, as part of the battle against the coronavirus pandemic, private educational establishments either cut their fees for May, or found they were unable to charge parents anything at all.

So the price of crèches fell by 30.1 per cent, of private primary education by 24.6 per cent, of private secondary education by 14.9 per cent, and of private higher education by 14.3 per cent.

Some foodstuffs rose in price in May – including brown sugar (11.5 per cent), onions (6.5 per cent), vegetable oil (3.4 per cent) and fresh fish (0.8 per cent). The price of new cars also rose (by 5.7 per cent).

The price fall was not the same in all three cities. In Beira, the average level of prices fell in May by 1.57 per cent, and in Maputo by 0.79 per cent. But in Nampula prices rose by 0.47 per cent.

Deflation in the middle of the year is quite normal in Mozambique – thus in May 2019, prices fell by 0.31 per cent. The basic trend is for prices to rise in the beginning of the year (January to April), fall in the winter months, as the harvest comes in (May to July), and then rise again in the final months of the year.

Source: AIM