The Covid-19 crisis has not significantly affected price dynamics in Morocco, reflected by a slight increase in headline inflation and stable core inflation, according to the latest policy brief from the Policy Center for the New South (PCNS).
Headline inflation fell from 0.9% on average over the period 2017 – April 2020 to 1.4% in April 2021, mainly due to the acceleration of price increases in the transport sector to 9.5 %, reflecting the increase in world oil prices, explain the two authors of the document Abdelaaziz Ait Ali and Uri Dadush, respectively Senior Resident Economist and Senior Fellow at the PCNS. The rise in food prices was weak until April, then accelerated to register an increase of 2.2% year-on-year, the highest since mid-2018, add the experts in the document entitled ” Is rising inflation a global risk? “.
And to note that core inflation has not changed compared to the pre-crisis period, hovering around 0.9%.
In the case of Morocco, “we could say that a moderate increase in the inflation rate is desirable, offering greater room for maneuver in monetary policy,” they believe. Since 2009, inflation in Morocco has fluctuated by nearly 1%, well below the 2% threshold recorded from 2000 to 2009 before the global financial crisis, the specialists recall, noting that the deceleration in prices has been associated with a decline in the long-term growth rate of more than 1 percentage point.
Both analysts believe that low, unexpected and persistent inflation can push real interest rates up, reducing willingness to invest. “Overall, a 1% increase in headline inflation or even core inflation will not have significant negative implications in Morocco,” the document concludes.