(Business in Cameroon) – The Bank of Central African States (BEAC) forecasts that inflation in the CEMAC region will return to the 3% standard by 2025. Yvon Sana Bangui, the BEAC governor, announced this projection on September 23, 2024, during a press conference following the third session of the Monetary Policy Committee (MPC) at BEAC’s headquarters in Yaoundé.
If this prediction holds true, it would mark a significant decline in inflation after three years of heightened pressure. In 2022, inflation in the CEMAC zone nearly doubled the community’s standard, reaching 5.5%. This represented a nearly 4% year-on-year increase, following a rate of 1.6% in 2021. Price pressures in the markets were officially attributed to the post-COVID recovery and worsened by the onset of the Russia-Ukraine conflict in February 2022. In 2023, inflation continued to rise slightly, hitting 5.6% by December, according to BEAC data.
However, since the beginning of 2024, there has been a “gradual decline” in inflation, projected at 4.2% after the MPC meeting on September 23. “Inflation persists, but the trend is downward,” noted Yvon Sana Bangui, expressing optimism about returning to the community’s standard inflation rate of 3% by 2025. Despite the liquidity needs in the regional banking sector—where requests have recently doubled the liquidity offers made by BEAC to commercial banks—the central bank kept its key interest rates unchanged after the MPC meeting.
Although BEAC resumed injecting liquidity into banks in June 2024 after a year-long suspension, it has also been withdrawing funds from banks. Recently, the central bank has started to reduce the volume of liquidity injected, despite the growing needs of credit institutions. According to BEAC, these measures aim to contain the share of inflation originating from monetary factors (20%). However, the effectiveness of these efforts could be undermined by rising prices in certain countries within the community, potentially hindering the goal of reaching a 3% inflation rate by 2025.
A looming challenge threatens this objective: rising fuel prices at the pump in some countries, such as Cameroon, intended to reduce the increasingly burdensome subsidy for the treasury. After two price adjustments in 2023 and 2024 under pressure from the International Monetary Fund (IMF), a third increase is expected in early 2025, as part of the government’s commitments in its economic and financial program with the IMF. Meeting this commitment is expected to impact inflation rates in CEMAC, given Cameroon’s economic weight in the region.
According to central bank, Cameroon, which anticipates returning to the standard inflation rate around 2026, represents 52% of consumption in the CEMAC zone. It also houses 40% of the community’s industrial fabric, thus “driving price dynamics in the region.” For instance, with an inflation rate of 6.6% in the first quarter of 2024, Cameroon contributed 57 points to the region’s inflation, down from 65.2 points at the end of December 2023.
