The Oxford Economics consultancy forecasts average inflation in Mozambique this year to be above 9%, the highest since 2017, and predicts social unrest due to the impact of prices in the transport sector.

"Inflation has reached a new four-year high against a backdrop of high oil and fuel prices caused by supply chain disruptions related to the war between Russia and Ukraine and the covid-19 pandemic," reads a commentary on price development data released Monday.

"We forecast the average annual inflation, this year, to rise from 5.7% in 2021, to over 9%, this year," write the analysts, in a commentary sent to investors and to which Lusa had access.

In the analysis, they point out that "difficulties in the global supply chain have been exacerbated by the series of tropical cyclones that hit central and northern Mozambique earlier this year, as well as the ongoing war in Cabo Delgado" and add that rising prices disproportionately affect some specific sectors, such as transport.

"Mozambican motorists are paying 33% more for fuel than they were 12 months ago; this sharp rise in fuel costs has sparked a wave of protests in the impoverished southern African nation, with demands from public transport operators for regulated fares to be increased," Oxford Economics stresses.

Analysts, moreover, expect troubled times in Mozambique, as "the government has ruled out the possibility of increasing subsidies on fuel and bakeries, and in fact has indicated that these subsidies will likely be eliminated," as the approval of the $456 million financing program by the International Monetary Fund (IMF) "increases the likelihood that subsidies will soon be reduced, which will create more pressure on consumer prices."

Year-on-year inflation in Mozambique was 9.31% in May, the highest in the last four years and seven months, hitting a new high for the period, as had already happened in April, the National Statistics Institute (INE) announced on Monday.

Year-on-year inflation in April had been 7.9% and rose 141 basis points in May, according to the new Consumer Price Index (CPI) bulletin.

You have to go back to September 2017 to find a higher figure: at that time inflation was 10.76%, in the wake of the shock caused by the hidden debts scandal.

The rise that has taken place since the beginning of the year is in line with all forecasts and the global inflationary climate.

The rate is also approaching 10%, a value that the Bank of Mozambique and most analysts say will not be reached, despite the context.

The food, non-alcoholic beverages, and transportation divisions contributed the most to the price increase.

The CPI figures are calculated by INE from the price variations of a basket of goods and services, with data collected in the cities of Maputo, Beira and Nampula. (Lusa)