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Despite Q1 GDP growth, inflation hits 5 years high at 6.5% in South Africa

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Inflation rate in South Africa jumped to 6.5% in May of 2022, from 5.9% in April and Marchexceeding the central bank’s stated target.

Official data released on Wednesday revealed that the rise is the highest in five yearabove market expectations of 6.2%.

The new inflation figures are a sharp contrast to the report South Africa’s economy growth which has seen its  gross domestic product (GDP) expand by 1,9% in the first quarter of 2022, representing a second consecutive quarter of upward growth. The size of the economy is now at pre-pandemic levels, with real GDP slightly higher than what it was before the COVID-19 pandemic.

South Africa’s central bank had set its inflation target range at 3−6%. The country formally introduced inflation targeting in February 2000, a framework in which the central bank uses monetary policy tools, especially the control of short-term interest rates, to keep inflation in line with a given target.

Excluding energy and food, core inflation also rose to 4.1 percent in May from a year earlier, up from 3.9 percent in April.

The ongoing war between Russia and Ukrain has put lots of strain on many African countries as the two European neighbours contribute significantly to the supply of food to the world. A factor that experts have attributed to be part of the reasons for rise in food inflation in many developing countries.

A similar trend is observed in Nigeria, another Africa’s economic power where official figures in May, 2022 shows that composite food index rose to 19.50 percent on a year-on-year basis.

Inflation refers to the rise in the prices of most goods and services of daily or common use, such as food, clothing, housing, recreation, transport, consumer staples, etc. Inflation measures the average price change in a basket of commodities and services over time.

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Farmers lament as wild fire, heat waves cut grain harvest in Tunisia

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Farmers union in Tunisia has forecasted that output will fall well short of government hopes following heat waves and fires that are badly damaging the country’s grain harvest.

Farmers union official Mohamed Rejaibia, pointing to fires that began raging over much of the country last month, said that was no longer possible.

“The grain harvest will not be more than 1.4 million tonnes,” said Rejaibia, a member of the union’s executive office. “Some of it will be lost to fires and some perhaps during collection.”

The North African country has struggled with food importation costs driven higher by the war in Ukraine. That is largely because Ukraine and Russia account for a great amount of the global supply for grains, particularly wheat.

Earlier this month, agriculture minister, Mhamoud Elyess Hamza forecasted the 2022 grain harvest would reach 1.8 million tonnes, that is 10% up from last year’s harvest.

Wild fire has had a devastating effect in Tunisia. According to a statement released by the Tunisian Federation of Insurance Companies (FTUSA), the insurance industry in the country paid fire insurance claims totalling TND25m ($8m) in 2015 and the quantum jumped over the years to TND107m in 2020. That represented an average increase over 30% a year.

Another farmer, Abderraouf Arfaoui, in Krib, revealed that most of his colleagues had to harvest their grains earlier than usual.

“Usually we begin the harvest season in July, but this year we started on June 18… we are afraid of fires. We must watch our land day and night.

“We must harvest without waiting, even if that reduces the quantity and quality of the wheat, and when we finish the harvest we must watch our haystacks, too.”

 According to Thinkhazard, wildfire hazard is classified as high with more than a 50% chance of encountering weather that could support a significant wildfire that is likely to result in both life and property loss in any given year.

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Zimbabwe’s central bank raises key rate to 200%. Will that help its inflation surge?

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Zimbabwe’s economic woes continue as the Southern African country’s central bank said it was raising its key rate to 200 percent.

The decision makes Zimbabwe’s rate the highest in the world as it battles with soaring inflation persist. The rate was last raised to 80% in April from 60%.

The central bank a statement said it had more than doubled the rate in the push to try to contain inflation, which has been further aggravated by the war in Ukraine, expressing “great concern”.

The key rate is the interest rate at which banks can borrow when they fall short of their required reserves. They may borrow from other banks or directly from the Federal Reserve for a very short period of time.

According to thecentral bank governor, John Mangudya,rising inflation has depressed demand and consumer confidence and if left unchecked will wipe out the significant economic gains made over the past two years.

Zimbabwe’s economy is in deep crisis, including a withdrawal of international donors because of unsustainable debt with inflation rate in Zimbabwe averaging 80.42 percent between 2009 and 2022.

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