Inflation is a general increase in the prices of goods and services in an economy. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country. A volatile metric, inflation that can rise and fall rapidly depending upon economic conditions and the measures a government chooses to control or counteract them. Inflation is connected to the economic principles of supply and demand and can be viewed positively or negatively depending on the specific situation and the rate of change.
For example, a small amount of inflation is usually viewed as a signal that a country’s economy is growing and its residents have adequate income, both good things. However, excess inflation happens when prices too rise faster than wages, causing currency to lose value. The worth of a single unit of currency becomes less than it was previously and the purchasing power of the country’s currency is decreased. Conversely, too little inflation can also be a troubling indication that a country’s economy is stagnant and not enough people have enough work.
There are three inflation indexes: the consumer price index (CPI), the wholesale price index (WPI), and the Producer Price Index (PPI). The CPI is a measure that examines the weighted average prices of primary needs – such as transportation, food, and medical care – at the consumer/retail level. The WPI measures and tracks price changes at the producer or wholesale level before the goods reach the consumer. The PPI is a family of metrics that measure price changes from the perspectives of the seller/producer rather than the buyer/consumer.
Inflation is classified into three types: demand-pull inflation, cost-push inflation, and built-in inflation. All three of these are related to the equilibrium between the supply of money and the supply of goods in a country’s economy.
Top Ten African Countries With the Highest Inflation Rate in 2022
While inflation is a concern across the continent, it is more acute in some countries and living in these nations can be rather costly. We’ll look at the top ten African countries with the highest inflation rates in this article.
According to Trading Economics, Sudan had the highest inflation rate in Africa in March 2022, at 259.80 percent. A rapid currency depreciation and monetization of the fiscal imbalance have resulted in significant inflationary pressures. According to Sudan Central Bureau of statistics, Sudan’s inflation rate is anticipated to reach 270.00 percent by June 2022.
Zimbabwe has the continent’s second highest inflation rate, with annual inflation rising to 72.7 percent in March 2022, up from 66.1 percent in February. The parallel exchange rates have been blamed for Zimbabwe’s soaring inflation. According to Trading Economics global macro models, Zimbabwe’s inflation rate will reach 85.00 percent by April 2022 and is expected to hover around 50.00 percent in 2023 and 30.00 percent in 2024.
Ethiopia is in third place, with an inflation rate that has greatly improved in the last three months, despite the fact that it is still high. Ethiopia’s annual inflation rate fell for the second month in a row in February 2022, to 33.6 percent from 34.5 percent in January. According to Trading Economics global macro models, Ethiopia’s inflation rate will be 40.00 percent by the end of the year and will fall again to 12.00 percent in 2023 and 10.00 percent in 2024.
Angola’s annual inflation rate fell to 27.28 percent in March 2022, down from 27.66 percent in February, for the first time in 11 months. From 2001 to 2022, the inflation rate in Angola averaged 33.72 percent, with a high of 241.08 percent in January 2001 and a low of 6.89 percent in June 2014. According to Trading Economics global macro models, the oil-rich country’s inflation rate will be 30% by the end of April 2022 and is expected to trend at 16 percent in 2023 and 12 percent in 2024.
Ghana’s annual inflation rate increased in March 2022, to 19.4 percent from 15.7 percent in February. The growing inflation in Ghana has been related to the Russia-Ukraine conflict. According to Trading Economics global, Ghana’s inflation rate is predicted to reach 25.00 percent by the end of April 2022. In the long run, the Ghana Inflation Rate is expected to decline, with a target of roughly 10% in 2023 and 7% in 2024.
6 Sierra Leone
Sierra Leone has the sixth highest inflation rate in Africa, at an annual rate of 17.94 percent. According to Trading Economics global macro models, Sierra Leone’s inflation rate will reach 20.00 percent by the end of May 2022. The Sierra Leone Inflation Rate is expected to hover around 7.00 percent in 2023.
Nigeria’s annual inflation rate increased from 15.6 percent in February to 15.7 percent in March 2022. Nigeria’s inflation rate is anticipated to reach 17.00% by the end of April 2022. According to Trading econometric models, the Nigeria Inflation Rate is expected to trend at 10.00 percent in 2023 and 8.00 percent in 2024.
Burundi’s inflation rate is currently 13.32 percent and is anticipated to reach 15.00 percent by the end of 2022. From 1974 to 2022, the inflation rate in Burundi averaged 10.71 percent, with a high of 44.93 percent in May 1997 and a low of -8.40 percent in October 2018. The Inflation Rate is expected to trend around 6.00 percent in 2023 and 5.00 percent in 2024.
After the presidential elections in 2021, Zambia’s annual inflation rate continued to fall. According to the Zambian Central Statistical Office, the rate fell for the eighth month in a row to 13.1 percent in March 2022. According to Trading Economics global macro models, Zambia’s inflation rate will be 13.00 percent by the end of April 2022. In the long run, the Zambian inflation rate is expected to hover around 8% in 2023 and 7% in 2024.
Malawi now has the tenth highest annual inflation rate on the continent, at 13% as of March 2022. According to Trading Economics global macro models, Malawi’s inflation rate will be 11.00 percent by the end of June 2022 and is expected to hover around 8% in 2023 and 7.40 percent in 2024.