Top 10 countries with highest Inflation in Sub-Saharan, 2024

In today's article, we will satisfy your curiosity about the 10 Sub-Saharan African countries with the highest inflation as measured by the Consumer Price Index (CPI). We use data from the World Economic Review dataset of International Monetary Fund (IMF) data published annually. The region discussed here is Sub-Saharan Africa, which has 45 countries according to the International Monetary Fund.

What is inflation?

Inflation is a macroeconomic concept that expresses the rate at which the total cost of goods and services increases over time. This is essentially a reduction in the purchase of money, meaning each currency buys fewer goods and services than before.

Inflation can be caused by many factors::

Demand-Pull Inflation: This occurs when aggregate demand in an economy exceeds aggregate supply, leading to increased prices due to the imbalance between demand and supply.

Cost-Push Inflation: This type of inflation occurs when the costs of production increase, leading producers to raise prices to maintain their profit margins. Factors such as higher wages, increased raw material costs, or higher taxes can contribute to cost-push inflation.

Monetary Inflation: When the money supply in an economy grows faster than the rate of economic growth, it can lead to monetary inflation. This often happens when central banks engage in expansionary monetary policies, such as printing more money or lowering interest rates, to stimulate economic activity.

Built-In Inflation: Also known as wage-price inflation, this occurs when workers demand higher wages to keep up with rising prices. This leads to a cycle where higher wages lead to higher production costs, which are then passed on to consumers as higher prices, prompting further wage demands.

Inflation is typically measured using various indices, such as the Consumer Price Index (CPI) and the Producer Price Index (PPI). Central banks and governments closely monitor inflation rates and often implement policies to manage inflation and maintain price stability in the economy.

Inflation can be calculated by different indexes and in this article, we are going to analyze the Consumer price index.

What is the Consumer Price Index (CPI)

The Consumer Price Index (CPI) is a measure used to track changes in the price level of a basket of consumer goods and services over time. It is one of the most commonly used indicators for measuring inflation and price changes in an economy. Here are the key points about the CPI:

Composition of the CPI Basket: The CPI basket includes a wide range of goods and services that are typically consumed by households. This can include food, housing, clothing, transportation, healthcare, education, and recreation, among others. The basket is designed to reflect the spending patterns of an average consumer.

Calculation of CPI: The CPI is calculated by comparing the cost of the basket of goods and services in a specific period (such as a month or a year) with the cost of the same basket in a base period (often set as 100). The percentage change in the CPI over time indicates the inflation rate.

Weighting: Not all items in the CPI basket carry equal weight. Items that consumers spend a larger portion of their income on are given higher weights in the index. For example, housing expenses typically have a higher weight than recreational expenses.

Uses of CPI: The CPI is widely used by governments, central banks, economists, businesses, and individuals to understand changes in the cost of living, adjust salaries and pensions for inflation, make policy decisions, and analyze economic trends.

Core CPI: In addition to the overall CPI, there is also a measure called Core CPI. Core CPI excludes certain volatile items such as food and energy prices, which can experience significant short-term fluctuations. Core CPI is often used to get a more stable and long-term view of underlying inflation trends.

Inflation Targeting: Many central banks around the world use CPI or similar indices as a basis for their inflation-targeting policies. They aim to keep inflation within a target range by adjusting monetary policies such as interest rates.

Overall, the CPI provides valuable insights into how the prices of goods and services are changing over time, helping to inform economic decision-making and policy formulation.

Below are the countries in Sub-Saharan Africa with the highest Inflation, by Consumer Price Index (CPI) in 2024:

1. Zimbabwe: is number one on the list with 36.944.13, Zimbabwe has a history of hyperinflation, with extremely high inflation rates in the past. While the situation has improved somewhat in recent years, it has still experienced significant inflationary pressures.
2. South Sudan: is number two on the list with 16,247.11, South Sudan has also faced high inflation rates due to various economic challenges, including political instability and conflict.
3. Democratic Republic of Congo (DRC): DRC is number three on the list with 8,175.20 In recent years, the DRC has seen moderate inflation rates compared to some other African countries. However, the exact inflation rate can vary from year to year based on economic conditions, with political instability.
4. Guinea: number four on the list is Guinea with 2,769.54, it is like many countries, that experience fluctuations in its inflation rate due to various economic factors.
5. Liberia: on number 5 we have Liberia with 1,098.51, Liberia's inflation rate has shown variations, with periods of both moderate and higher inflation rates. The rate can be influenced by factors such as changes in food prices, fuel prices, currency exchange rates (especially the Liberian dollar), and global economic conditions.
6. The Gambia: on Number 6 we have The Gambia with 765.54. The Gambia's inflation rate has shown variations over the years, influenced by factors such as changes in food prices, fuel prices, currency exchange rates (especially the Gambian dalasi), and global economic conditions.
7. Angola: at number 7 we have Angola with 744.72. Angola has seen periods of high inflation rates in the past, although there have been efforts to stabilize the economy and control inflation. Inflation rates can be influenced by factors such as changes in food prices, fuel prices, currency exchange rates (especially the Angolan kwanza), and global economic conditions.
8. Nigeria: on the list, we have Nigeria at number 8 with 573. 87. Nigeria's inflation rate has shown variations over the years, influenced by factors such as changes in food prices, fuel prices, currency exchange rates (especially the Nigerian naira), and global economic conditions.
9. Ghana: Ghana is number 9 on the list with 531. 60. Ghana's inflation rate has shown variations over the years, influenced by factors such as changes in food prices, fuel prices, currency exchange rates (especially the Ghanaian cedi), and global economic conditions.
10. Kenya: we have Kenya at number 10 with 524.09. Kenya's inflation rate has shown variations over the years, influenced by factors such as changes in food prices, fuel prices, currency exchange rates (especially the Kenyan shilling), and global economic conditions.

In conclusion, inflation is a significant economic indicator that reflects changes in the price level of goods and services over time. Various factors, such as demand and supply dynamics, cost-push pressures, monetary policies, and external economic conditions, can influence inflation rates in different countries.

Countries in Sub-Saharan Africa, including Angola, Nigeria, Ghana, Kenya, Liberia, and others, have experienced fluctuations in their inflation rates due to a range of economic factors unique to each nation. These factors include changes in food and fuel prices, currency exchange rate fluctuations, government policies, economic diversification efforts, and global economic trends.

For the most accurate and up-to-date information on inflation rates in specific countries, it is essential to consult official sources such as central banks, national statistical agencies, international economic organizations, or reputable financial institutions. These sources provide detailed insights into the current inflation situation, economic trends, and policy measures implemented to manage inflationary pressures.

Author: Donald Masimbi