London, April 6, 2026 (Lusa) - Oxford Economics has revised its inflation forecast for Mozambique upwards, now anticipating a price rise of around 7.7% this year, due to the effects of the war in the Middle East.
The central bank’s decision to keep interest rates unchanged in mid-March “is prudent and reflects broader concerns regarding price stability, following the attack on Iran by the US and Israel in late February”, say the analysts, citing not only the rise in oil prices but also the wider effects on global trade of the closure of the Strait of Hormuz.
Analysts from the African department of this British consultancy firm anticipate “a sharp depreciation” of the metical by the end of June, under the planned agreement with the International Monetary Fund, and argue that "this depreciation will exert upward pressure on prices through the exchange rate pass-through effect, which is expected to push inflation up to 7.7% in 2026", Oxford Economics’ previous forecast was 4.8% for this year, already reflecting an increase compared to last year’s average price rise of 4.4%.
In addition to the new inflation forecast of 7.7%, Oxford Economics also estimates that the central bank will raise the base rate to 10.4% by the end of the year to mitigate price fluctuations.
Cumulative inflation for 2024, according to previous data from Mozambique's Statistics Institute (INE), stood at 4.15%, compared with 5.3% in 2023, but below the peak of almost 13% reached in July 2022.
The government had forecast inflation of around 7% for 2025, as well as for 2026.
In March, the Bank of Mozambique kept its monetary policy interest rate at 9.25%, following 12 consecutive cuts since January 2024, in light of the “substantial worsening” of risks, and revised its inflation forecast upwards.
“This decision stems from the materialisation and substantial worsening of certain risks and uncertainties associated with inflation projections, notably the inclusion of the conflict in the Middle East and its impacts on the logistics chain, as well as on the supply and prices of energy and food products, which influenced the upward revision of the inflation outlook,” announced the governor of the central bank, Rogério Zandamela.
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