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Inflation under control in Mozambique

The Mozambican government is winning its battle agai nst inflation, according to the latest data from the National Statistics Institu t e (INE).

INE said inflation in December, as measured by the Maputo City consumer price in dex, was only 0.47 per cent.

This is quite unlike the trend in previous years, when the festive season had be en used as an excuse for price hikes. For instance, inflation went up to 2.8 per

cent in December 2007.

The low December inflation was caused by significant reductions in the price of fuel, which helped to reduce the burden of the high prices of several key foodst u ffs, including tomatoes, potatoes and chicken.

The Bank of Mozambique reports that the Mozambican currency, the metical, has be gun to slide against the dollar and the euro.

On the Interbank Exchange Market, on 31 December, the US dollar was quoted at 25 .09 meticais. This was a 0.4 per cent depreciation in the space of a fortnight.

Taking 2008 as a whole, there was a 6.09 nominal depreciation of the metical aga inst the dollar. This compares with a rise in the value of the metical against t h e US currency of 8.3 per cent in 2007.

The metical depreciated over the year by 2.86 per cent against the euro, but ros e in value by 22.3 per cent against the South African rand.

However, in recent weeks the metical has lost some of its gains against the rand . In the last fortnight of the year, there was a nominal depreciation of 9.4 per

cent against the rand.

The central bank put the country’s net international reserves on 31 December at slightly more than US$ 1.6 billion, enough to cover five months worth of imports .

This is much higher than the initial forecast of only US$ 589 million in reserve s

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