Determinants of Price Dynamics in African Countries

This study analyzes the different determinants of price dynamics in Africa. We employed Bayesian Model Averaging to shed light on the primary determinants of price dynamics while taking into account the uncertainty associated with model design. Data was collected on 51 (Note 1) African countries for the chosen period from 1980-2020. The findings show that price dynamics in Africa are explained by various factors; the prices of imported foodstuffs, the production gap, government efficiency, the rule of law, English origin, and distance from the sea have a positive effect on price dynamics. Conversely, the interest rate, gold prices, millet supply, the budget balance rule, political stability and absence of violence, corruption control, and rural population have a negative effect on price dynamics in Africa. We urge the African governments to alleviate inflationary pressures and foster a more stable and prosperous economic environment for their citizens. Thus, monetary policy plays a crucial role in managing inflation in Africa. The establishment of an observatory of price dynamics is a solution to maintaining and controlling inflation in African countries.