Delivering the latest findings on the economy of the country by the Bank at its quarterly Monetary Policy Committee (MPC) meeting, held on Tuesday (27 Aug 2024), Governor Buah Saidy stated that as regards domestic price developments, the disinflation process that started four months ago has continued to consolidate. “In July 2024, headline inflation declined to 9.7 percent, down from 14.9 percent in March 2024. The decline was broad-based, with a fall in both food and non-food inflation,” the Governor said.
Specifically, he stated: “Food inflation decelerated to 13.0 percent in July 2024, from 14.4 percent in June 2024 and 20.3 percent in March 2024. The easing of food inflation reflects moderation in major components in the food basket, including a deceleration in the price indices of bread and cereals, fish, vegetables, and fruits and nuts. Nonfood 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.”
Further analysis, according to the Governor, showed that the central bank’s core measure of inflation, which excludes volatile energy and food products, also decreased during the review period. “This suggests that underlying inflationary pressures in the domestic economy are easing,” he reasoned, saying: “The inflation outlook remains encouraging, and the headline inflation is projected to decline closer to the Bank’s target by the end of 2024, barring any further surprises in international commodity prices.”
The Bank has proactively set this target to resist volatility even though international food prices have also been going down in recent months.
“The international food prices eased in July 2024, as indicated by the FAO Food Price Index, which fell by 0.7 percent from June 2024 and by 3.1 percent from a year ago,” stated the MPC report read out by Governor Saidy. “This moderation was driven by a decrease in the cereal price index, which offset the increases in the indices for vegetable oil, meat and sugar.
“Furthermore, the average international rice prices declined in July 2024 for the third consecutive month, largely influenced by sluggish demand and the expectations that India may amend its export restrictions on rice. The FAO Rice Price Index dropped by 2.4 percent from June 2024, reaching a 12-month low.”
Back on the domestic front, the Gambian economy is said to have continued its “strong performance in the second quarter of 2024, with encouraging signs” in the fight against inflation.
Recent data released by the Gambia Bureau of Statistics (GBoS), the MPC report cited, indicated that the Gambian economy grew by 4.8 per cent in 2023, compared to the revised growth of 5.5 per cent in 2022. “Growth was mainly supported by a pickup in the services and industry sectors, reflecting the buoyant private and public construction activities,” the report indicated.
In view of the latest developments outlined by the MPC report, the Committee has concluded that monetary policy should stay the course to support the disinflation or price reduction process.
Consequently, the MP Committee has taken the following policy decisions: that the Monetary Policy Rate (MPR) will be maintained at 17.0 percent; that the Required Reserve (RR) ratio of commercial banks will be maintained at 13.0 percent; that the interest rate on the standing deposit facility “will remain unchanged at 3.0 percent”, and that the interest rate on the standing lending facility will remain at 18.0 percent or MPR plus 1.0 percentage points.
“The Committee will continue to monitor developments in both the domestic and global economy in deciding its next policy steps,” the Governor stated.
