Cost of living: inflation and political risk in West Africa

Headline inflation has increased significantly for the region and is viewed as an indicator of country risk. However, to establish individual political and economic risk ratings, there is a requirement to assess the preparedness of households, businesses and government to manage cost of living pressures.

This means looking at the difference between the current rate and the prior lived experience of local decision makers. Recent reported rates of inflation are highest in Ghana, Nigeria and Sierra Leone but gap between today’s rate of increase and the trend is highest in Benin, Burkina Faso and Cabo Verde. The pressure for a change in policy or policy makers may be higher than expected where the difference is highest.

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