By Zainab Joaque
Freetown, SIERRA LEONE – Sierra Leone’s annual inflation rate soared to nearly 51% in August 2023, marking the highest level since February 1998. This dramatic increase was driven by substantial price hikes in both food products, which rose by 62.75% compared to 59.93% in July, and non-food products, which increased by 41.90% compared to 33.91%.
According to the latest data released by Statistics Sierra Leone, inflation accelerated for the fifth consecutive month, surging to 50.94% in August 2023, up from 44.98% in the previous month, reflecting a significant 5.96% increase.
On a monthly basis, the Consumer Price Inflation (CPI) experienced a remarkable rise of 5.31%, marking the most substantial increase since February.
Historically, Sierra Leone’s inflation rate has averaged 27.87% from 1986 to 2023, reaching an all-time high of 255.56% in April 1987 and a record low of -21.76% in January 2000, according to Trade Economics.
Breaking down the 50.94% inflation rate into Classification of Individual Consumption by Purpose (COICOP) divisions, Statistician General Andrew Bob Johnny revealed that the most significant impacts, relative to their weights, were observed in the Food and Non-alcoholic beverages (25.29%), Transport (3.59%), Restaurant and Hotels (3.81%), and Health (3.53%) categories.
Johnny explained, “We noted a more than five-percentage-point increase in the year-on-year national inflation rate in August 2023, with Food and Non-alcoholic beverages and most non-food items, especially Transport, making the most significant impacts. Furthermore, the national estimate exceeds that of the Northern region but falls below the estimates of the Western, Southern, Eastern, and North-West regions.”
The National CPI measures the month-to-month price changes, on average, for goods and services purchased by households in various regions, including Freetown, Bo, Kenema, Kono, Makeni, Port Loko and Kambia, encompassing all expenditure groups. Prices are collected for at least 440 items.
All prices collected represent prevailing retail market prices, sourced from six markets in Freetown and three markets each in Bo, Kenema, Kono, Makeni, Port Loko and Kambia for weekly prices, along with other outlets for monthly items that are less prone to rapid fluctuations.
Johnny noted that they employ the Modified Laspeyres formula to compute indices according to the COICOP, which includes 12 functions. Recently, Sierra Leone restructured the CPI, basing it on December 2021 data, increasing the number of items in the basket, and expanding its coverage to the North-West region.
Meanwhile, in July 2023, several West African countries reported marginal increases in inflation rates, but they continue to grapple with double-digit inflation rates.
In light of Sierra Leone’s soaring inflation, concerns are mounting over its economic stability, with authorities and policymakers striving to address the challenges posed by this escalating inflationary trend.
