Maputo — The Mozambican government is winning its battle against inflation: according to the latest data from the National Statistics Institute (INE), inflation in December, as measured by the Maputo City consumer price index, was only 0.47 per cent.

This is quite unlike the trend n previous years, when the festive season has been used as an excuse for price hikes. Thus inflation in December 2007 was about 2.8 per cent.

For the year as a whole, the INE gives an inflation figure of 6.19 per cent, which compares with 10.26 per cent in 2007.

The low December inflation was affected by significant reductions in the price of fuel, which helped offset rises in the price of several key foodstuffs, including tomatoes, potatoes and chicken.

The Bank of Mozambique reports that the Mozambican currency, the metical, has begun to slide against the dollar and the euro. On the Interbank Exchange Market, on 31 December, the US dollar was quoted at 25.09 meticais. This was a 0.4 per cent depreciation in the space of a fortnight.

Taking 2008 as a whole, there was a 6.09 nominal depreciation of the metical against the dollar. This compares with a rise in the value of the metical against the US currency of 8.3 per cent in 2007.

The metical depreciated over the year by 2.86 per cent against the euro, but rose in value by 22.3 per cent against the South African rand. However, in recent weeks the metical has lost some of its gains against the rand. In the last fortnight of the year there was a nominal depreciation of 9.4 per cent against the rand.

The central bank put the country's net international reserves on 31 December at slightly more than 1.6 billion US dollars, enough to cover five months worth of imports. This is much higher than the initial forecast of only 589 million dollars in reserves.