(Ecofin Agency) - With its inflation rate reaching 8.4% in September, the WAEMU is facing an unprecedented inflationary spiral, which is still defying government initiatives and BCEAO rate hikes. However, the institution is optimistic that it would slow down in October.

Inflation would drop to 8% in October 2022 in the WAEMU region, the central bank BCEAO announces in its latest monthly economic report. 

The downward forecast would be achieved thanks to the emergency measures taken by member countries to combat rising prices and the  "expected interventions under the National Response Plans (NRP) approved by member countries and their partners," the BCEAO indicates. The forecast is also based on an expected decline in freight costs, consistent with the trend observed between January and August 2022, as well as an expected increase in agricultural production for the 2022/2023 season, which should result in a slowdown in the rise in local grain prices.

Even though the 8% forecasted for October 2022 is an improvement compared to the rates recorded over the past three months, it is almost thrice the central bank’s target (3%). In its report, the BCEAO explains the high inflation is caused by the expected rise in global oil and food prices amid the Russia-Ukraine crisis. 

For several months now, inflation is rising in the WAEMU region partially due to the  Russia-Ukraine war, which is affecting global food prices. In the region, inflation rose from 8.1% in July to 8.5% in August. According to the BCEAO, the 8.4% level posted in September is due to the acceleration of prices in the "Food" component, which contributed 6.4 percentage points to overall inflation, and to a lesser extent to the "Transport" and "Housing" segments, which contributed 0.7 and 0.6 percentage points respectively.

The central bank explains that in the “Food” component, inflation was caused by local supply deficit -because of low supply and supply challenges caused by persistent health and security crises- and a 13.3% drop in the region’s cereal production during the 2021/2022 crop season. It adds that in the “Transport” component, prices rose because of the increase in fuel prices that sent transport costs up.   

Moutiou Adjibi Nourou