(Business in Cameroon) - Final consumption in Cameroon dropped sharply in the fourth quarter of 2022. According to the National Stats Agency (INS), which reported the information, the situation is the result of growing prices on the market.

The growth rate of final consumption in the country over the period was 1.8% with a contribution to GDP growth of 1.6 percentage points (+3.9%). In Q3 2022 the rate was 3.6% and 5% in Q2. INS attributes this underperformance to the continuous rise in consumer prices, which increased by 7.7% in Q4 and 6.2% throughout the year. INS also found that this slowdown in final consumption was more driven by private individuals, mainly households. With a weakening purchasing power, this category of economic agents reduced their demand for various products, particularly beverages, chemicals, textile industry products, real estate services, and furniture. Private final consumption only grew by 1% in the last three months of 2022, compared to 3.1% in the previous quarter.

On the other hand, the public sector recorded a growth rate of 6.9% in Q4 compared to 6.8% in the previous quarter. This means that despite the challenging economic conditions, the government and its departments slightly increased their demand for goods and services. "Final consumption was supported by strong demand for goods from the grain industry, as well as demand for telecommunications and public administration services," says the INS.

The overall slowdown in final consumption should also be seen as a consequence of the restrictive monetary policy implemented by the Bank of Central African States (BEAC). Since December 2021, the central bank has intermittently raised its key interest rates. The Tender Interest Rate (TIAO) was raised from 4.5% to 5%, while the rate on the marginal lending facility was increased from 6.25% to 6.75%.

The objective is to reduce the quantity of money in circulation, which would lower demand and subsequently lead to a decrease in price levels.