From September 2023 to April 2024, headline inflation reduced progressively from 18.5 percent to 11.0 per cent.
The inflation, from September last year, first went down to 14.9 per cent in March this year before landing at 11 per cent in April 2024.
According to the latest MPC report of the Central Bank of the Gambia (CBG), “Headline inflation decelerated for the third consecutive month, driven by moderated global commodity prices and domestic policy actions. In April 2024, headline inflation declined to 11.0 percent, down from 14.9 percent in March 2024 and the peak of 18.5 percent in September 2023. The decline was broad-based, with a fall in both food and non-food inflation. Looking ahead, if there are no sudden surprises, especially in global commodity prices, inflation is expected to decelerate to single digits by the end of 2024.”
Giving the specifics, the report, delivered by the CBG Governor Buah Saidy on Thursday 23 May this year, stated that food inflation reduced to 15.6 per cent from 21.0 per cent in December 2023, adding that the decline in food inflation was a result of “the significant” reduction in the prices of bread and cereals and meat while prices of vegetables and dairy products remained held up.
“Similarly, non-food inflation declined to stand at 5.4 per cent from 8.7 percent reported in March 2024, owing to a decrease in prices of textiles and energy.”
The report stated further that the central bank’s core measure of inflation, which excludes volatile energy and food products, also declined significantly during the review period, suggesting that underlying inflationary pressures are abating.
While the inflation pressures have started to ease, the MPC report stated that strong economic growth momentum “continues” in The Gambia.
“According to the Bank’s latest forecast, the economy is projected to grow by 5.5 per cent in 2024, surpassing the estimated growth rate of 5.3 percent for 2023. This forecast indicates a further upward adjustment by 0.1 percentage points from the February projections. Growth is anticipated to be supported by public and private infrastructure investments, household consumption & investment, tourism, and financial services. Significant risks continue to weigh on this growth trajectory including the uncertain geopolitical environment, volatility in commodity prices, and structural bottlenecks within the domestic economy.”
Economic/business activity was discovered to have improved in the first quarter (Jan - March) of 2024 by the latest Business Sentiment Survey carried by the Central Bank.
“The majority of respondents anticipate a surge in economic activity over the next three months, driven by robust consumer demand,” the report stated, although the Bank maintained cautious optimism, as concerns linger over “persistently high inflation expectations” echoed by a “significant portion” of the businesses surveyed.
While the CBG’s Monetary Policy Committee “is of the view that the Gambian economy will continue its strong performance”, they also joined member central banks and committees in taking cognizance of the “uncertainties” surrounding international commodity markets and their potential adverse impact on the disinflation process or drive.
The monetary policy committee also observed that past policy actions “are paying dividends as inflation continues to decline, with a favourable” outlook.
The projection, the Committee stated, is anchored on “easing global commodity prices” and the “effects of domestic policies”.
It adds: “Without further surprises, especially on international commodity prices, domestic inflation will continue to fall towards the 5 per cent medium-term target.”
However, the Committee recognises the significant risks surrounding the outlook, which calls for prudent policy calibration (measures/checks) to sustain the declining inflation.
As the global economic environment continues to be fluid, it observes, the importance of policy coordination to safeguard gains in the fight against inflation and sustain macroeconomic stability going forward is crucial.
Four important steps the MPC has taken to ensure inflation returns to its desired target are that it has maintained the Monetary Policy Rate (MPR) at 17 per cent; the Required Reserve (RR) ratio of commercial banks at 13 per cent; the interest rate on the standing deposit facility at 3 per cent, and the interest rate on standing lending facility at 18 per cent, which is the Monetary Policy Rate of 17% plus 1 percentage point.
