The Africa’s Pulse report, a biannual look at the sub-Saharan region’s economic trajectory, said this week that Africa’s central bankers are caught in a bind.
In layman’s terms, this means central banks are hiking interest rates in a bid to contain inflation, which is slicing across the continent like a scythe. But this policy response in Africa may be a dull blade. This can be seen in South Africa, where retail trade sales in February fell 0.9% year-on-year, according to data released this week by Statistics South Africa . When demand pressures are muted they tend not to be inflationary, which means inflation is bubbling against the backdrop of economic weakness – a classic sign of emerging stagflation.
It said more than 80% of the countries in the region for which data was available experienced food inflation of more than 5% in the year to February 2022 and nearly half were saddled with double-digit inflation.