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Johannesburg - Inflation in Mozambique is likely to ease gradually to levels of below 10% year-on-year (y/y) by mid-2011, Standard Bank analyst Henry Flint said on Friday.
He said Mozambique's consumer inflation ended 2010 much higher than expected and above the government's target.
Inflation expanded by 3.48% month-on-month (m/m) in December, resulting in a 16.62% y/y growth rate. This was the highest growth rate since September 2010 when y/y growth came in at 16.8%.
The food and non-alcoholic drinks component of the CPI contributed the most to the increase in December's m/m inflation.
Flint said December's inflation reading resulted in the 12-month moving average inflation rate accelerating to 12.7% y/y in December from 11.7% y/y in November.
Like other monetary authorities concerned about rising inflation, the Mozambican government recently raised interest rates and implemented some direct price control measures, including lowering import tariffs and fixing the prices of certain foodstuffs.
"We believe that these measures and the stronger Mozambican exchange rate, especially against the rand, will result in gradual disinflation in 2011, allowing room for monetary easing, particularly in the second half," said Flint.
Longer-term yields, currently at levels above 15%, are expected to narrow in the second half of 2011 once the disinflation becomes entrenched, Flint concluded.
He said Mozambique's consumer inflation ended 2010 much higher than expected and above the government's target.
Inflation expanded by 3.48% month-on-month (m/m) in December, resulting in a 16.62% y/y growth rate. This was the highest growth rate since September 2010 when y/y growth came in at 16.8%.
The food and non-alcoholic drinks component of the CPI contributed the most to the increase in December's m/m inflation.
Flint said December's inflation reading resulted in the 12-month moving average inflation rate accelerating to 12.7% y/y in December from 11.7% y/y in November.
Like other monetary authorities concerned about rising inflation, the Mozambican government recently raised interest rates and implemented some direct price control measures, including lowering import tariffs and fixing the prices of certain foodstuffs.
"We believe that these measures and the stronger Mozambican exchange rate, especially against the rand, will result in gradual disinflation in 2011, allowing room for monetary easing, particularly in the second half," said Flint.
Longer-term yields, currently at levels above 15%, are expected to narrow in the second half of 2011 once the disinflation becomes entrenched, Flint concluded.
