Africa’s double-digit inflation economies to cool despite Middle East risks

Africa is expected to see fewer countries grappling with double-digit inflation by 2026, with the number projected to fall to nine from 13 in 2024, signalling steady progress in the continent’s fight against high prices despite lingering risks from the Middle East crisis.

According to the latest Africa Economic Update by the World Bank, consumer price inflation is easing across a growing number of Sub-Saharan African economies, although the pace of disinflation remains uneven across countries.

Median inflation in the region declined from 4.4 percent in 2024 to 3.7 percent last year. However, it is projected to rise to 4.8 percent in 2026—largely due to spillovers from the Middle East conflict—before moderating to about 3.8 percent over the 2027–2028 period.

“Geopolitical risks arising from the conflict in the Middle East could reverse some of these gains by raising fuel, transportation, and fertiliser costs, thereby exerting upward pressure on food prices in 2026,” the report said.

Broad-based slowdown across economies

About 70 percent of African economies (33 out of 47) recorded slower inflation in 2025 compared to the previous year. Among these countries, the median inflation rate is estimated at 3.3 percent, although eight economies still failed to achieve single-digit inflation on an annual average basis.

After years of elevated—and in some cases runaway—inflation, more African economies are returning to single-digit territory, signalling a gradual improvement in macroeconomic stability.

Between September and January, four previously high-inflation economies—Ghana, Ethiopia, Zambia and Zimbabwe—returned to single-digit inflation for the first time in years, driven by tighter monetary policy, improved currency stability and reforms backed by multilateral institutions.

The disinflation trend has been supported by declining global fuel and food prices, improved external balances, stronger and more stable currencies, and sustained monetary tightening across the region.

Currency gains across the continent have also reflected stronger financial conditions, increased foreign exchange inflows from market reforms, rising export earnings—particularly from metals, minerals, and beverages—and a weaker US dollar.

International oil and food prices have declined from their peaks in the second half of 2022, supported by increased output from non-OPEC+ producers and rising global inventories. Improved weather conditions and stronger agricultural output have also helped moderate food inflation across several countries.

According to the World Bank, easing inflation in countries such as Angola, Ethiopia, Ghana and Nigeria has created room for cautious monetary policy easing.

However, risks remain tilted to the upside. Global uncertainty, higher food and fuel prices, and a potentially stronger US dollar—linked to geopolitical tensions—could reignite inflationary pressures and delay monetary policy normalisation.

Diverging inflation outlook across country groups

Inflation dynamics vary across different country groups.

Among oil-exporting economies, inflation is projected to fall from 5.7 percent in 2024 to 3.2 percent in 2025, before rising to 6.2 percent in 2026 and easing again to 3.1 percent over 2027–2028.

For mineral and metal exporters, inflation is expected to decline from 6.7 percent in 2024 to 3.4 percent in 2025, rise to 5.2 percent in 2026, and moderate to about 4.1 percent thereafter.

In non-resource-rich countries, inflation is projected to edge down from 4.0 percent in 2024 to 3.7 percent in 2025, before ticking up to 4.3 percent in 2026 and easing to an average of 3.8 percent in 2027–2028.

Middle East conflict fuels new uncertainty

The recent escalation in tensions involving the United States, Israel and Iran has injected fresh uncertainty into global markets, with benchmark oil prices surging above $100 per barrel following the outbreak of the conflict in February.

Prices briefly eased below that level last week after a ceasefire announcement between the United States and Iran, but rebounded above $100 on renewed tensions after United States President Donald Trump signalled plans to impose a naval blockade on Iran.

For fuel-importing African economies, the impact has been immediate. Rising pump prices are feeding into higher transport, food and production costs, eroding purchasing power and threatening to reverse recent disinflation gains.

Data from Trading Economics already show signs of renewed price pressures. Last month, inflation has picked up in Egypt, Zimbabwe and Kenya, reflecting higher fuel costs and food prices, although Ghana and Zambia have continued to record declines.

Policy responses diverge across Africa

Government responses across Africa have varied based on fiscal capacity and exposure to fuel imports.

Some countries—including Kenya and Namibia—have cushioned consumers through fuel levies and stabilisation mechanisms, while others such as Ethiopia have introduced emergency subsidies.

But countries with limited fiscal space—including Ghana, Malawi, Mali and Tanzania—have adjusted regulated fuel prices upward, while economies like Somalia and Zimbabwe have seen sharp increases in pump prices.

The World Bank cautions against untargeted fuel subsidies, noting that they are costly and regressive. Instead, it recommends scaling up targeted and temporary social protection measures, alongside investments that support job creation, particularly in rural agricultural value chains.