The consulting firm NKC African Economics estimated last Friday that inflation in Mozambique is expected to rise from 3.1% last year to 5.3% this year due to the covid-19 pandemic and rising oil prices.

"We anticipate inflation accelerating to 5.3% this year, compared to 3.1% recorded in 2020; the central bank had anticipated a rise in inflation with an unexpected 300 basis point rise in the direCtory interest rate in January, but we expect no further moves this year," the analysts write in a commentary on inflation developments in Mozambique in May.

Mozambique has accentuated deflation (price reduction) in May compared to the previous month, with the price of the basket used to calculate Mozambique's Consumer Price Index (CPI) dropping 31 basis points from April to May, giving a monthly deflation of 0.31%, but still an increase of 30 basis points from 5.19% (in April) to 5.49% in May, compared to the same month last year.

"Although continued weak domestic demand will continue to hold down inflation this year, the price index will face upward pressures due to currency depreciation, rising oil prices and disruptions to supply chains," write the analysts at this African branch of Oxford Economics.

Last year, the metical fell 10% in a context of falling commodity prices and strong global risk aversion, but managed to recover part of this loss in the first months of this year, when it recorded a strong rise, which has since stabilized.

Cumulative inflation in the first three months of 2021 is now 3.07%.

Mozambique ended 2020 with a cumulative inflation of 3.52%.

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