Angola: Angolan inflation expected to fall near to 11 pct target

5 December 2008

Lisbon, Portugal, 5 Dec – Angola will be able to reduce its inflation rate to close to the official target of 11 percent, but will have to overcome obstacles such as the constraint in availability of goods and services, according to a report published in Lisbon Thursday.

In the report from the Office of Economic and Financial Studies of Portuguese bank, BPI, economists consider that Luanda’s task has now been made easier particularly because of the greater stability of the country’s currency, the kwanza, against the dollar as well as the “significant fall in prices of food goods on the international market.”

However, they noted, “constraints remain on the supply side, which are mainly due to logistical difficulties related to a lack of capacity of Angola’s ports to receive goods. This factor is expected to continue to apply pressure on consumer prices in the opposite direction.”

As well as this, aggregate demand is being stimulated by strong growth in deposits and credit, related to Luanda’s “expansionist fiscal policy.”

In 2006, Angola posted an annual inflation rate of close to 16 percent and in the middle of last year a 10 percent target was in view, but with price hikes in the imports on which the country depends, this target was not reached.

Official figures currently point to stable year on year inflation, which stood at 12.9 percent in September. (macauhub)