{
  "title": "Inflation Dynamics in the West African Economic and Monetary Union: WAEMU",
  "publication": "Selected Issues Papers, June 19, 2023",
  "sourceUrl": "https://www.imf.org/en/publications/selected-issues-papers/issues/2023/06/19/inflation-dynamics-in-the-west-african-economic-and-monetary-union-waemu-534876",
  "canonical": "https://www.imf.org/en/publications/selected-issues-papers/issues/2023/06/19/inflation-dynamics-in-the-west-african-economic-and-monetary-union-waemu-534876",
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  "summary": "This paper analyzes recent inflation developments in the WAEMU. As in all inflation spikes in the past two decades, food is the main driver of inflation. The contribution from energy prices is also increasing, while inflation contagion effects are still limited to a few sectors.",
  "sections": [
    {
      "heading": "Key findings on recent inflation developments",
      "content": "- Food is the main driver of inflation in all inflation spikes in the past two decades.\n- The contribution from energy prices is also increasing.\n- Inflation contagion effects are still limited to a few sectors.\n- The share of professionals that believe that inflation will continue above the target within the one-year horizon is at high levels compared to 2021."
    },
    {
      "heading": "Projections and model results",
      "content": "- Projections are based on two models.\n- Results suggest that inflation is expected to converge to its target range within 24 months given:\n  - the reduction of exogenous shocks weighing-in on food and energy prices,\n  - the exhaustion of base effects,\n  - a reduction in supply and demand imbalances."
    },
    {
      "heading": "Policy implications and recommended stance",
      "content": "- The chapter evaluates appropriate monetary policy responses to the recent inflationary pressures.\n- Further monetary policy tighten would be necessary unless downside risks to forecasts for baseline inflation and external buffers improve."
    },
    {
      "heading": "Risks and uncertainty",
      "content": "- Numerous external and internal factors affect inflation prospects and should be carefully monitored.\n- There is pronounced uncertainty surrounding geopolitical and economic developments that could alter the baseline projection.\n\n---\n\n Content in this bundle\n\n- Sipea2023038\n  - Sipea2023038 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Sipea2023038 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/selected-issues-papers/issues/2023/06/19/inflation-dynamics-in-the-west-african-economic-and-monetary-union-waemu-534876"
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    "Authors: Cecilia Melo Fernandes",
    "Published: June 19, 2023",
    "Series: Selected Issues Papers",
    "DOI: https://doi.org/10.5089/9798400245886.018",
    "Food is the main driver of inflation in all inflation spikes in the past two decades.",
    "The contribution from energy prices is also increasing.",
    "Inflation contagion effects are still limited to a few sectors.",
    "The share of professionals that believe that inflation will continue above the target within the one-year horizon is at high levels compared to 2021.",
    "Projections are based on two models.",
    "Results suggest that inflation is expected to converge to its target range within 24 months given:",
    "The chapter evaluates appropriate monetary policy responses to the recent inflationary pressures.",
    "Further monetary policy tighten would be necessary unless downside risks to forecasts for baseline inflation and external buffers improve.",
    "Numerous external and internal factors affect inflation prospects and should be carefully monitored.",
    "There is pronounced uncertainty surrounding geopolitical and economic developments that could alter the baseline projection.",
    "**Sipea2023038**"
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