The minister described the high global food and energy prices and strong domestic demand as factors that strengthened inflationary pressures in the country. “Inflation reached a record-high level of 18.5 percent (year-on- year) in September 2023, but this has reduced to 18.05 percent in October 2023.”
Speaking at the Parliament, Mr. Keita informed legislators that “tighter global financial conditions in response to multi-decade highs in global inflation rate is adversely affecting the country’s macroeconomic fundamentals, generating foreign exchange shortages, weighing on forex reserves, and exerting pressure on the Dalasi”.
Meanwhile, the Central Bank of The Gambia had previously informed that “the dalasi depreciated moderately against three major traded currencies. From June to September 2023; it depreciated by 2.7%, 2.3%, and 0.1% against the US dollar, Euro, and CFA, respectively, but appreciated by 1.5% against the British Pound Sterling. ”
“This situation was aggravated by the balance of payments [being] negatively affected by high food and fuel import bills, disruptions of cashew and elevated freight costs.”
Speaking on the impact of inflation, Minister Keita noted that “it continues to erode household purchasing power; monetary policy tightening in response to record-high inflation has raised the cost of borrowing, restricting credit to productive sectors; China’s pace of recovery has slowed; and geopolitical tensions are far from over.”
Minister Keita highlighted that global headline inflation was also a challenge which “was expected to decline from its peak of 8.7% in 2022 (annual average) to 6.9% in 2023. This is projected to decline further to 5.8% in 2024 as central banks raised interest rates to combat inflation. ”
“Two of the main driving factors of inflation are the cost of food and fuel which the Finance Minister made mention of in his 2024 Budget Speech. Although food availability in the market remains generally robust across the country, there has been a notable increase in the prices of cereal crops in 2023 compared to the preceding year,” Hon Seedy Keita said.
“The main reason for the price surge is primarily attributed to global inflation and the ongoing conflict in Ukraine. The Gambia’s dependence on food imports has amplified the impact on the prices of basic commodities, further exacerbated by the continuous rise in fuel prices, which has subsequently led to elevated transportation costs. ”
