"Despite the bad economic conditions and the recent strengthening of the kwanza, inflation has continued on an increasing trajectory, mainly due to the effects of the great weakness of the national currency in 2019 and 2020, due to the oil price shock caused by the covid-19 pandemic and by the limited intervention of the central bank", write the analysts of Oxford Economics Africa.
In a note on the update of the inflation forecast, sent to customers and to which Lusa had access, the analysts write that "this year there will be some comfort for consumers, following the October decision of the Government to reduce VAT on some essential products from 14 percent to 7 percent, which, in addition to the appreciation of the kwanza and softer global food prices, will help the inflation rate to reach the end of the year with an average of 19.9 percent".
The kwanza lost more than half (56 percent) of its value against the dollar between 2019 and 2020, but recovered more than 15 percent of those losses last year, and has been appreciating against the dollar earlier this year as well.
According to data from the International Monetary Fund, this will be the lowest figure for inflation since 2015, the year in which prices rose 9.6 percent in Angola.
