Madagascar is experiencing an inflation peak, reaching an average of 9.9 % in 2023. However, forecasts indicate a gradual slowdown by 2028, bringing this rate down to 4.9 %. This trend is primarily based on significant adjustments in the rice, energy, and food sectors. These industries are essential components of the Consumer Price Index (CPI).
Rice and energy : Key inflation factors
With a weight of 17.9 % in the CPI, rice shows an average inflation of 11.3 % in 2023. Although notable, this increase begins a gradual decline to stabilize around 6.3 % in 2028. The reduction results from better production factor management and improved supply chain regulation.
Regarding energy, representing 7.8 % of the CPI, fluctuations remain significant. After an 8.3 % inflation in 2023, projections forecast a steady reduction to 6 % in 2028. This decrease is explained by the stabilization of energy costs, impacting all goods and services. These two sectors, cumulatively 25.6 % of the CPI, have a direct impact on the overall cost of living. Adjustment efforts aim for sustainable stabilization to contain overall inflation and ensure economic balance.
Convergence with core inflation
The data and projections highlight a convergence between general and core inflation. Excluding volatile prices like rice and energy, core CPI averages 7.6 % in 2024. This reflects better control of structural factors.
This dynamic should strengthen economic stability while preserving purchasing power nationwide. Additionally, projections indicate a constant decline to 4.5 % in 2028, close to the overall inflation estimated at 4.9 % at the end of the same year.
Food products : Towards a Gradual Slowdown
Dominating the CPI structure with 52.9 %, food products record high inflation in 2023, reaching 12 %. However, projections indicate a steady slowdown, reducing the rate to around 5 % in 2028. This trajectory reflects structural reforms in the agricultural sector and efforts to strengthen food security.
Policies to improve agricultural yields and stock management contribute to this downward trend. Investments in rural infrastructure and agricultural technologies also help stabilize food prices while meeting growing demand.
Non-food products : Similar dynamic
Representing 47.1 % of the CPI, non-food products follow a comparable trend. The average inflation rate gradually decreases, from 7.2 % in 2023 to 4.7 % in 2028. This decline relies on controlling production costs and raw material prices. Improved logistics chains, coupled with support measures for manufacturing industries, play a central role in this trend. Cost optimization and better productivity favor a long-term balance between supply and demand.
Economic outlook : Towards sustainable stabilization
According to the analysis of the Central Bank of Madagascar, the price increase observed in 2023 mainly results from a limited supply. Facing persistent inflation at the beginning of 2024, this institution sets the permanent facility rates at 9.50 % for deposits and 11.50 % for loans. Additionally, public and private investments are expected to boost economic activities and restore overall supply, according to their forecasts.
Food products, with their predominant weight, benefit from targeted measures to ensure food security and reduce production costs. Non-food products follow a similar trajectory. This sector is supported by productivity gains and investments. The development of internet infrastructure in Madagascar, for example, enhances competitiveness while promoting price reductions. Access to more affordable internet, now essential for households and businesses, accompanies this dynamic.
Efforts to strengthen economic resilience, notably through the diversification of productive sectors, significantly contribute to this trend. Controlled inflation thus promotes better price stability, essential for supporting purchasing power and encouraging consumption.
