Inflation: Government is “overwhelmed” | L’Economiste

Inflation is at the center of the concerns not only of companies and households whose purchasing power has eroded but also of the Government which seems to be “overwhelmed”. The measures taken so far have not had the expected effects.

Mustapha Baitas, Minister Delegate in charge of Relations with Parliament and Government Spokesman, acknowledged that the efforts made by the Government have not achieved the expected goals. Baitas acknowledges that “ the situation is much more complex ”. Neither the direct aid to transporters, nor the ban on the sale of certain products abroad, and even less the suspension of VAT and customs duties, have made it possible to limit the rise in the price of fruit and vegetables. Inflation recorded in February is driven by the index of food products which increased by 20.1% versus 3.6% for non-food products. For the past few weeks, the Government has been monitoring market supplies. This takes place under “ normal conditions ” and inspections have multiplied. Nonetheless, the Government is struggling to bring order to the multitude of intermediaries which significantly accentuates speculation downstream of the agricultural sector with consequences for consumers. In any case, the price of a product varies according to the types of marketing channels it takes before reaching the consumer. The price can be multiplied by three or four as noted by the Economic, Social, and Environmental Council. This situation raises questions about the delay in implementing the necessary reforms, especially since the problem has been known and identified for a long time. Concerning this issue, the Government promises to overhaul the wholesale fruit and vegetable markets. A roadmap on the modernization of equipment is reportedly being prepared. In the meantime, the situation is complicated and could break the social peace negotiated with the trade unions. In any case, the latest figures from the High Commissioner’s Office for Planning (HCP) for the month of February, and the medium-term forecasts from the central bank had a shocking effect. The general rise in prices exceeds the levels recorded over the past 30 years and the situation could last much longer. Inflation reached 10.1% in February according to the HCP, and after the rate of 6.6% recorded last year, the return to the target level (2%) seems difficult, at least according to central bank forecasts. Bank Al-Maghrib, which canceled its press briefing on Tuesday March 21, limited itself to a press release. The institution has revised its inflation forecast upwards by 2 points to 5.5% in 2023. That is not all. There are also risks posed to growth. The agricultural value added should not experience a significant increase due to a weak agricultural season. On the non-agricultural side, activities should be impacted by the deterioration of the external environment, and therefore a slowdown in non-agricultural value added is expected. Under these conditions, growth should not exceed 2.6%… a level that is too low, given the major projects that are waiting to be launched.

Khadija MASMOUDI