Inflation Down to Single Digits for the First Time in 2024

Central Bank Governor Buah Saidy (c) Askanwi

By Yusef Taylor, @FlexDan_YT

For the first time in 2024, Headline Inflation has declined to single digits in July 2024, down to 9.7% from 14.9% in March 2024. This was revealed during the Central Bank’s latest press briefing after the Monetary Policy Committee (MPC) met on 27th August 2024. The presser adds that “the decline was broad-based, with a fall in both food and non-food inflation”.

During the Central Bank’s previous MPC meeting they issued a presser predicting that “inflation is expected to decelerate to single digits by the end of 2024”. Headline inflation is a measure of food and non-food inflation which measures the rate of increase of prices of food and non-food products.

According to Consumer Price Index published in March 2024 by the Gambia Bureau of Statistics (GBOS), Inflation has been in double digits as far back as March 2023, when it stood at 14.83%.

Since then, Headline Inflation increased to a peak of 18.51% in September 2023 and has been on the decline since then. Looking at the graph of Annual Inflation Rate by GBOS shows that the trend of food inflation and non-food inflation are very similar to Headline Inflation.

Inflation Statistics (c) GBOS

Food Inflation Still in Double Figures

From the chart shown above, Food Inflation is generally 5% higher than Headline Inflation and over 10% higher than Non-Food Inflation. Food Inflation concerns most Gambians who continue to grapple with increasing food prices in the market.

According to the latest Central Bank MPC presser, Food Inflation has reduced to 13.0% in July 2024 down from 14.4% in June 2024. This decline in Food Inflation is due to “a deceleration in the price indices of bread and cereals, fish, vegetables, and fruits and nuts”.

Below is a list of the items included in the GBOS Consumer Price Index which is used to measure and calculate Food Inflation.

Items in Food Basket (c) GBOS

Turning our attention to non-food inflation shows that “Non-food inflation stands at 5.5 percent in the review period, unchanged from June 2024 figure, but lower than the 8.7 percent reported in March 2024” according to the latest MPC issued in August 2024. Non-Food Inflation Products and Services are shown below.

Items in Non Food Inflation Basket (c) GBOS

Why is Inflation Declining but Prices Are Still Increasing?

Many Gambians continue to wonder why they are not observing a reduction in prices of good and commodities when Central Bank is reporting a decline in Inflation. Our research has shown that as long as inflation is above 1%, then there is an increase in prices.

When Inflation is 0% that means that the prices of goods and services have remained unchanged. As long as Inflation figures are not negative, prices of goods and services are not going down.

For example, when Inflation declines from 8.7% to 5.5%, this means that the rate of price increase has reduced from 8.7% to 5.5%. In reality it doesn’t mean prices have declined. Instead, it means that prices of commodities are increasing at a rate of 5.5% instead of a higher rate of 8.7%.

Inflation Explainer (c) Askanwi