The Consumer Price Index (CPI) for July, as reported by INE, indicates that Mozambique recorded a price decrease of 0.22% compared to June. Notably, the sectors of food and non-alcoholic beverages, and transport contributed negatively to the overall monthly variation by 0.21 and 0.11 percentage points, respectively.
Breaking down the monthly variation by product, significant price reductions were observed for tomatoes (8.7%), diesel (4.8%), gasoline (1.5%), kale (6.4%), cabbage (15.9%), onions (4.7%), and lettuce (10.2%). These contributed about 0.33 percentage points negatively to the overall monthly variation, the report notes.
This represents the eighth deflation in Mozambique’s prices in under a year and a half, following CPI declines of 0.11% in August, 0.05% in July, 0.21% in June, and 0.38% in May of 2024, as well as 0.38% in April, 0.36% in May, and 0.7% in June of this year, repeated last month at 0.22%.
The INE also states that, compared to 2024, the CPI shows a year-on-year price increase in July of 3.96% (4.15% in June), mainly influenced by the divisions of food and non-alcoholic beverages, as well as restaurants, hotels, cafés, and similar outlets, which grew 8.99% and 8.91% year-on-year, respectively.
The accumulated inflation of 2024 is recorded at 4.15%, compared to 5.3% in 2023, but below the peak of nearly 13% reached in July 2022.
The government forecasts that Mozambique will end 2025 with an inflation rate around 7%.
The Bank of Mozambique expects that the annual inflation rate will continue to decelerate in the coming months, reflecting the recent decision to exempt some basic products from VAT and reduce toll rates by up to 60%.
“In the short term, the trend of annual inflation deceleration is expected to continue, reflecting the impact of the VAT exemption on basic products (sugar, cooking oil, and soap), reduced water and toll tariffs, and falling international food prices, in a stable metical context,” reads the report on Economic Situation and Inflation Prospects, reported in May.
The document further notes that the usual survey among economic agents “supports the prospects of annual inflation deceleration,” as the macroeconomic expectations of these agents in the May study “suggest an annual inflation of 4.90% in December 2025, indicating a downward revision of 3 basis points compared to expectations revealed in the April survey.”
“However, considerable risks and uncertainties persist, mainly of an internal nature, posing challenges to maintaining this scenario, with emphasis on the impacts of the worsening fiscal situation, uncertainty about the pace of recovery in production capacity and supply of goods and services, as well as the effects of climatic shocks,” adds the report.
