…Higher fuel costs linked to Middle East tensions reverse last year’s disinflation trend
Africa’s battle against inflation is showing signs of reversing, with several of the continent’s largest economies recording faster consumer price growth in the first half of 2026, after a year of easing inflation. This is due to higher fuel costs stemming from the Iran conflict, which are rippling through transport, food, and household expenses.
A BusinessDay analysis of the latest inflation data from the statistical agencies of 10 major African economies shows that all recorded higher inflation in the first six months of the year than during the same period in 2025, marking a sharp reversal from last year when price pressures broadly eased.
Ethiopia recorded the largest increase, with inflation rising by 4.1 percentage points, followed by Egypt (2.4 percentage points), Kenya (2.0 percentage points) and Ghana (1.5 percentage points). The remaining six economies also posted increases.
The resurgence contrasts with last year, when tighter monetary policy, moderating food and energy prices and stronger currencies helped cool inflation across much of the continent. According to the World Bank, about 70 percent of African countries recorded lower inflation last year.
The average inflation increase among the four worst-performing countries rose by 2.5 percentage points in H1, compared with an average 5.3 percentage-point decline during the same period a year earlier.
The World Bank warned in its April Africa’s Pulse report that Sub-Saharan Africa’s growth is projected to remain at 4.1 percent in 2026, but rising geopolitical risks threaten that outlook.
According to the multilateral lender, higher fuel, food and fertilizer prices, coupled with tighter global financial conditions, are likely to push inflation higher, weaken economic activity and disproportionately affect poorer households, which spend a larger share of their incomes on food and energy.
“In the short term, governments should target scarce ree, maintaining macroeconomic stability—by controlling inflation and exercising prudent fiscal management—will be essential to navigate the current shock and position African countries for a faster recovery once the crisis subsides,” said Andrew Dabalen, the Bank’s chief economist for the Africa region
The resurgence of conflict in the Middle East since July has erased the temporary decline in oil prices that followed the June ceasefire between Israel and Iran. After falling below $80 a barrel, brent crude has rebounded towards $100, increasing fuel import costs for many African economies. The higher energy prices have fed into transport and food costs, weakening household purchasing power and making it harder for central banks to sustain the disinflation achieved last year.
Business activity has also moderated. S&P Global’s Africa Purchasing Managers’ Index averaged 50.5 in the first half, slightly below 50.9 a year earlier, indicating that private-sector activity remained in expansion territory but expanded at a slower pace amid geopolitical uncertainty.
Ethiopia posts biggest inflation jump
Ethiopia recorded Africa’s largest inflation increase during the first half.
Annual inflation rose to 13.9 percent in June from 13.4 percent in May, according to the Ethiopian Statistical Service, reaching its highest level in a year.
Food inflation climbed to 15.1 percent, continuing an upward trend after falling into single digits in December for the first time in almost a decade.
The resurgence in the continent’s second most populous nation, prompted the National Bank of Ethiopia to raise its benchmark policy rate to 16 percent from 15 percent, its first increase since introducing the policy rate framework in 2024.
Egypt pauses easing as inflation remains elevated
Egypt recorded the second-largest rise in inflation among the countries analysed.
Headline inflation in Africa’s second biggest economy, stood at 14.3 percent last month, up from 11.9 percent in January, despite weaker economic growth and softer domestic demand.
The Central Bank of Egypt kept its benchmark interest rate unchanged at 19 percent, extending its pause after nearly a year of monetary easing, saying it remains too early to resume rate cuts despite expectations that inflation will moderate over the medium term.
The Egyptian pound weakened 3.9 percent against the US dollar during the first half of the year, adding to imported inflation pressures.
Kenya remains relatively stable
Although Kenya ranked third in terms of inflation increase compared with the same period last year, price pressures remained relatively contained.
Inflation eased to 6.4 percent in June from 6.7 percent in May, marking its first monthly slowdown since February before the Iran conflict started, as transport costs moderated.
The Central Bank of Kenya left its benchmark rate unchanged at 8.75 percent last month, saying the current policy stance remained appropriate to anchor inflation expectations and preserve exchange-rate stability.
East Africa largest economy’s shilling weakened by 0.9 percent against the dollar during the first half.
Ghana’s inflation gathers pace
After entering single-digit inflation in September for the first time since 2021, Ghana is once again facing renewed price pressures. Annual inflation accelerated for a third consecutive month to 5.3 percent in June, up from 3.7 percent in the previous month, marking the highest reading since last year December.
The increase was driven by faster growth in non-food prices, particularly transport, housing and education, while food inflation also continued to edge higher.
Meanwhile, the cedi, the currency of Africa’s largest gold producer, weakened 5.46 percent against the dollar in the first half of the year.
Reflecting the renewed inflation risks, the Bank of Ghana last week kept its benchmark policy rate unchanged at 14 percent, extending a pause in its monetary easing cycle. Policymakers said rising geopolitical tensions and uncertainty over global energy prices could complicate the country’s path toward sustaining low inflation, despite the significant progress made since inflation fell into single digits last year.
South Africa hit by fuel-price surge
South Africa’s inflation accelerated for a fourth consecutive month to 5.0 percent in June from 4.5 percent in May, exceeding market expectations in the continent’s biggest economy.
Transport costs rose 12.7 percent, reflecting a 34.3 percent jump in fuel prices as higher global oil prices filtered into the economy.
Last week, the South African Reserve Bank unexpectedly kept its repo rate unchanged at seven percent, despite expectations of another increase, as policymakers sought to balance rising inflation risks against weak economic growth.
The rand, however, strengthened slightly during the first half, appreciating from 16.50 to 16.35 against the dollar.
Ivory Coast and Uganda record the smallest increases
Among the countries analysed, Ivory Coast and Uganda experienced the mildest increases in inflation.
Ivory Coast’s inflation edged up to 1.8 percent in June from 1.6 percent in May, remaining among the lowest on the continent.
Uganda’s inflation rose to 3.7 percent from 3.2 percent, driven mainly by transport, food and housing costs. The Bank of Uganda has maintained its benchmark lending rate at 9.75 percent since October 2024, arguing that its current policy stance remains appropriate even as inflation edges higher.
The East African nation’s shilling weakened 1.21 percent against the dollar, while the country continued to post Africa’s strongest PMI readings, highlighting resilient private-sector activity despite rising prices.
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