Mozambique: Deflation figures ‘misleading’ – NGO

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Mozambique: Deflation figures ‘misleading’ – NGO

2:20 CAT | 12 Jun 2020

File photo: Lusa

The Centre for Democracy and Development (CDD), a Mozambican civil society organisation, said on Friday that the 0.6% deflation recorded in May by the Consumer Price Index (CPI) of the Mozambican National Statistics Institute (INE) was “misleading”.

In an analysis of the INE data, the CDD says that the May CPI does not reflect the dynamics of the cost of living that Mozambique has been experiencing in recent months.

“In the current economic crisis caused by Covid-19, this deflation is not the result of an excess supply of products on the market, but of the scarcity of demand as a result of the deterioration of the purchasing power of families, especially those with low income,” the CDD says.

The CDD notes that the products consumed by families with higher incomes have suffered a drop in prices, but the goods purchased by families with lower incomes have experienced a sharp increase.

Kindergarten charges fell by 30.1%, private primary education fell 24.6%, private secondary education of the first cycle 14.9%, private higher education by 14.3% and gasoline by 2.0%.

By contrast, the price of brown sugar rose 11.5%, onions 6.5%, cooking oil 3.4%, rice 1.7% and fresh fish 0.8%.

In the analysis, the CDD again urged the government to “create and implement a social protection policy to rescue low-income families, who are increasingly at the mercy of the crisis caused by the Covid-19 pandemic”.

The INE IPC over the last 29 months shows that Mozambique registered monthly deflation in the middle of the year, in June 2018 of 0.12%, and between May and July 2019 of 0.31%, 0.23% and 0.31% respectively.

This time, “the country recorded from May to April 2020, deflation in the order of 0.6%”, mainly due to the fall of prices in the education (0.32%) and food and non-alcoholic beverages (0.23%) sectors, the INE notes.

Although it does not refer to the impact of Covid-19, the document covers a period in which schools were closed in Mozambique (since March 23) as part of measures to prevent the spread of the new coronavirus.

Several educational establishments have been renegotiating tuition fees with parents as a result of the suspension of the school year.

The 12-month average inflation rose in May from 2.73% to 2.78% – remaining at around 2.7% since November 2019. Annual inflation was 3.02%, the lowest value of 2020, and the accumulated total for this year, after five months, is inflation of 1.14%, lower than the same period in 2018 and 2019.

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

Source: Lusa