The Maan Movement presented this week its study of the current inflationary crisis in Morocco, and its assessment of the government and Bank Al-Maghrib’s measure to control rising prices and costs.
In a note, the movement recalled that inflation in Morocco has remained “one of the most important highlights of the macroeconomic data”, having not exceeded 2% from 2008 to 2021, before skyrocketing to 6.6% in 2022.
The inflation rate reached 8.9% in January 2023 and 10.1% in February 2023, with food prices up 18.4% year-on-year, and non-food products up 3.7% in February.
Regarding the objective reasons for inflation, the Maan Movement notes that the wave began gradually after the COVID-19 pandemic, which first caused an increase in global demand for commodities in general and energy in particular.
This “translated into an increase in the cost of production and an increase in the general level of prices,” before the inflationary wave was exacerbated and became more significant after the outbreak of the Russian-Ukrainian armed conflict last year.
“These data contributed to the formation of the first ‘imported’ inflationary wave in Morocco.”
For Maan, these conditions coincided with an unprecedented drought, a weak agricultural season and a decline in the added value added of the sector by almost two-thirds in 2022 compared to 2021, which led to a decline in food supply.
The aforementioned conditions “transformed inflation from an imported phenomenon into a domestic inflation, around which many factors come together for its formation, persistence, and even strengthening.”
The note mentions several imbalances that have “necessarily led to what has plagued Moroccan citizens,” namely the commercialisation structure of food products, saying this part of the chain exacerbates the problem through “monopolistic practices and successive conflicts.”
Such complaints over commercialisation practices have been a constant point of contention, as according to the Economic, Social and Environmental Council (CESE), they are responsible for an increase in product prices reaching more than four times the wholesale price.
The note also points to “the structure of storage and wholesale markets,” which they say represent a “structural problem in the commercialisation of fruit and vegetables,” and the fact that “the structure of prices on wholesale markets is subject to a markup equivalent to 7% of turnover, without any contribution to production or retail.”
In addition, the movement points out that “the Green Morocco Plan has been oriented towards the commercialisation of an agriculture oriented towards external exports markets.”
“Unrealistic government promises” are among the factors that have led to the emergence of inflation in its domestic form, says the movement, indicating their continued impact on citizens.
The Government based its expectations for the 2023 budget on an inflation rate that does not exceed 2%, explains Maan, adding that Bank Al Maghrib and the World Bank had forcast a rate of 5.5% for the year.
“If the High Commission for Planning is the public institution responsible for calculating the consumer price index and inflation rates through monthly notes, then the promotion of figures different from their numbers by the constitutional institutions confirms the great confusion we have experienced for many years with previous governments and we have lost the already shaky confidence as citizens and economic actors in all figures and official data.”
“Inflation in Morocco has become structural, reflecting imbalances in previous strategic choices to ensure the food security of Moroccan citizens,” says Maan, adding: “the measures taken by the government are nothing more than an attempt to mitigate a deep phenomenon that it seems unable to understand the depth.”
The movement emphasises that “the choice of a free price policy requires parallel institutions that work to curb speculation, consensus and lobbying.”
“Getting out of the inflation crisis comes with great political boldness in destabilizing the rentier structures embedded in the national economy, which earn money and accumulate wealth by drawing on the pockets of ordinary people,” the note concludes.
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