HCP: Inflationary pressures to continue, as purchasing power dwindles

Morocco’s High Commission for Planning (HCP) has maintained its inflation expectation forecasts, at times when the Kingdom recorded price hike rates that had not been seen for nearly three decades.

The HCP highlighted “the continued escalation of consumer prices” during the first quarter of 2023, in its “summary of the economic situation” issued on Thursday.

“Inflationary pressures are expected to remain strong with an expected rise in consumer prices by 9.4% instead of 8.3% during the previous semester and 4% in the previous year.”

The High Commission attributed the continuation of inflation mainly to food prices, which will rise by 18.2%, while non-food products will grow by 3.5%.

“The contributions of both fresh (+2.4 points) and non-fresh food prices (+4.4 points) are likely to remain at high levels under the influence of supply difficulties,” reports the Planning Delegation.

The HCP data confirmed that “both fresh vegetables, meat and oils contributed to the increase in total inflation (inflation globale) by more than one point, in light of the recording of weak precipitation and an increase in production costs (grains, livestock feed, etc.).”

In addition, the increase in the inflation rate  is due to “an increase in service prices by about 2.1%, instead of 1.9% during the fourth quarter of 2022, due to the increase in the prices of restaurants, hotels, and tourist offers.”

On the other hand, the HCP noted “the slowdown in the growth rate of energy prices to 7.8%, instead of 14% during the previous quarter, due to the decline in international prices for oil and its derivatives.”

As for manufactured goods, they will continue to grow at the same pace as the fourth quarter of 2022, by 4.4%.

In all, the High Commissioner for Planning expected the rate of latent inflation, which is the category of inflation that excludes regulated prices by the state and materials with a volatile price, “to continue its upward trend, to settle at 8.4% during the first quarter of 2023, instead of 7.6% during the previous quarter, and 3.5% during the same period in 2022.”

The delegate’s figures suggested that “internal demand will rise” during the first quarter of 2023, contributing 1.8 points to the growth of the national economy, instead of 0.8 points during the same period of 2022, attributing this improvement to “the growing consumption of public administrations by an estimated 4.6%.”

Household consumption will, in turn, witness a “modest increase,” says the institution, expecting it to reach “2.7%, in light of the continued decline in the purchasing power of citizens for the third consecutive quarter.”