Global oil prices surging past $100 per barrel threaten to undermine recent disinflationary gains across Africa, as central banks grapple with renewed inflationary pressures from energy and transport costs. While nine of 16 tracked economies saw annual inflation decline in August, seven, including Ghana and South Africa, recorded higher rates, highlighting the continent’s uneven economic recovery.
Over half of the 16 African economies monitored saw inflation declines in August, extending a broader disinflation trend that has persisted since early 2023. However, the resurgence of Brent crude prices above $100 per barrel since early September has raised concerns about reversing progress, particularly for oil-importing nations. At the time of writing, Brent crude traded at $107.8 per barrel, while West Texas Intermediate (WTI) stood at $95.46, according to global market data.
The price surge followed heightened Middle East tensions after former U.S. President Donald Trump rejected Iran’s peace proposal, fueling fears of prolonged conflict and supply disruptions. This energy shock has already begun to impact African economies, with fuel costs rising sharply in key markets like Nigeria, where petrol prices reached N1,400 per litre in Lagos and Abuja, according to Reuters. Dangote Refinery’s recent wholesale petrol price hike to N1,350 per litre further underscores the strain on consumers and businesses.
Mozambique led the disinflationary trend, with annual inflation dropping to 6.45% in August from 7.48% in July—the largest decline among tracked economies. Food and non-alcoholic beverages inflation fell sharply to 8.91% from 12.62%, driven by improved domestic supply chains and stable currency conditions. Côte d’Ivoire followed with a smaller but significant drop, recording 1.2% annual inflation—the lowest in the region—while Angola extended its disinflationary trajectory, reducing inflation to 8.78% from 9.33%.
Angola’s central bank responded to the trend by cutting its key interest rate by 100 basis points to 14.75% in early September, marking its third consecutive rate reduction. The move reflected improved price stability, supported by relative kwanza stability and increased availability of essential goods. However, the country remains vulnerable to global oil price fluctuations, which could disrupt its monetary easing strategy.
Nigeria’s inflation eased marginally to 15.39% in August from 15.43%, with food inflation declining to 19.57% from 20.31%. Despite the improvement, the Central Bank of Nigeria (CBN) cut its benchmark interest rate by 350 basis points to 23% in September—the largest reduction since 2007—citing signs of moderation. However, rising fuel costs, including a N2,000-per-litre diesel price in major cities, pose a risk to sustained disinflation.
Egypt’s inflation fell to 14.5% in August from 14.9%, with food and beverage inflation dropping to 6.3% from 8%. The Central Bank of Egypt maintained its key rate at 19% in August, extending its pause in monetary easing amid geopolitical pressures on the Egyptian pound and fuel import costs. The decision reflects the central bank’s cautious approach to balancing price stability with economic growth.
Ethiopia recorded a modest 15.1% annual inflation in August, its first decline in five months. While the improvement is positive, the country remains among Africa’s highest-inflation economies, alongside Nigeria and Egypt. Southern African nations like Zambia and Zimbabwe also saw declines, with Zambia’s inflation falling to 6.2% from 6.5% and Zimbabwe’s to 2.9% from 3.2%.
Botswana’s inflation eased to 9.3% from 9.4%, continuing its decline from a recent peak of 10.7%. Lower transportation, food, and utilities costs contributed to the moderation. However, South Africa’s inflation rose to 4.4% from 4.3%, driven by transport and housing costs. The South African Reserve Bank responded by raising its repo rate by 25 basis points to 7.25% on September 23, citing inflationary risks.
East African economies faced divergent trends, with Kenya, Uganda, and Tanzania recording inflation increases. Kenya’s inflation rose to 6.6% from 6.5%, remaining above its central bank’s target range for a fifth consecutive month. Uganda’s inflation climbed to 4.1% from 4%, while Tanzania’s increased to 4.3% from 4.2%, driven by transport, education, and housing costs. Ghana and Mauritius also saw renewed pressure, with inflation rising to 5% from 4.6% and 4.9% from 4.4%, respectively.
Tunisia’s inflation accelerated to 5.4% from 5.1%, primarily due to food and non-alcoholic beverages. The region’s mixed outcomes underscore the uneven impact of global oil price shocks, with oil-importing economies facing higher import bills and currency pressures. Oil exporters like Nigeria and Angola may benefit from higher revenues but still face domestic fuel price volatility linked to global markets.
The August data highlights Africa’s fragile disinflation progress, with nine economies recording declines and seven seeing increases. However, the return of oil prices above $100 per barrel means the September inflation figures will be critical in assessing the resilience of recent gains. Central banks now face the challenge of distinguishing between temporary energy shocks and broader inflationary trends, which will shape monetary policy decisions in the coming months.
As global oil markets remain volatile, African economies must navigate the dual challenge of sustaining disinflation while mitigating the economic fallout of higher energy costs. The next phase of inflation data will provide clarity on whether the continent’s progress is durable or at risk of reversal, with significant implications for monetary policy and economic stability across the region.