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Revisiting the drivers of inflation in Sub-Saharan Africa after COVID-19

Author

Listed:
  • Dennis Nsafoah

    (Niagara University)

  • Cosmas Dery

    (Sam Houston State University)

  • Ayobami E. Ilori

    (The Open University UK)

Abstract

The recent global inflation surge has revived debates on its drivers and the essential role of price stability in the macroeconomy. This paper examines the drivers of inflation and their relative importance in the Sub-Saharan African (SSA) region from 2003 to 2022, with a specific spotlight on the COVID-19 pandemic era. We use a Bayesian VAR model with a penalty function approach to identify different shocks that drive inflation. We find a significant shift in the drivers of inflation, with external shocks (global demand and supply) explaining 63% of the inflation rise during the pandemic era compared to 38% in the pre-pandemic era, at the SSA aggregate level. We also observe heterogeneity in inflation drivers across SSA sub-regions and individual countries, highlighting distinct patterns in inflation drivers. These results suggest that policy responses should be tailored to the characteristics of each sub-region and country to effectively manage inflation and reduce the effects of external and internal shocks on price stability.

Suggested Citation

  • Dennis Nsafoah & Cosmas Dery & Ayobami E. Ilori, 2025. "Revisiting the drivers of inflation in Sub-Saharan Africa after COVID-19," Empirical Economics, Springer, vol. 68(3), pages 1073-1112, March.
    • Handle: RePEc:spr:empeco:v:68:y:2025:i:3:d:10.1007_s00181-024-02666-0
    DOI: 10.1007/s00181-024-02666-0
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    More about this item

    Keywords

    Inflation; Monetary policy; External shocks; Domestic shocks; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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