(Business in Cameroon) - Inflation pressures could be higher in 2022 and 2023 than they were in the CEMAC region in 2021, the Bank of Central African States (BEAC) reveals in its December 2021 Monetary Policy Report.
According to the central bank, this would be due to the rising shipping costs caused by the coronavirus pandemic which reduced containerships' transportation capacities, caused container and labor shortages, forced access restrictions in port areas, and facilitated port congestions.
The central bank explains that inflation will likely rise because as shipping costs are rising, firms (both manufacturing and commercial) will face additional charges that they will pass onto the costs of products and services offered to households.
To justify its assumption, the BEAC referred to the ‘Review of Maritime Transport 2021’ published on November 18, 2021, by the United Nations Conference on Trade and Development (UNCTAD). “The impact of the high freight charges will be greater in small island developing states (SIDS), which could see import prices increase by 24% and consumer prices by 7.5%. In the least developed countries (LDCs), consumer price levels could increase by 2.2%,” the report explains.
For the time being, the BEAC is forecasting a 2.2% inflation for the CEMAC region in 2022, up by 0.5% compared with the 1.7% recorded in 2021. It also suggests CEMAC member countries should take tax and customs measures to control inflation.
“The tax and customs measures -like those issued on November 16, 2021, by the Cameroonian government for an 80% discount on the freight charge- to be taken into account for the calculation of the customs value of goods imported by sea could help control the impacts of sipping costs on prices in Cameroon in the short-term,” the central bank indicates. Meanwhile, GICAM, the largest employers’ grouping in Cameroon, estimates the discounting measure will have less to no impact.
Let’s note that Cameroon is planning further measures to control imported inflation. “It is common knowledge that the pandemic has led to rising sea freight costs, thus directly increasing the price of essential goods. Aware of the huge sacrifices made by national economic operators to mitigate the impacts of the pandemic, I instructed the Government to reduce by 80% the sea freight transportation cost to be included in calculating customs duties. The Government must also continue discussions with the private sector to identify further measures that can be implemented,” President Paul Biya said in his December 31, 2021, address to the nation.