Inflation by Category: Food, Transport, and Housing
Angola’s consumer price index (CPI), compiled by the Instituto Nacional de Estatistica (INE), stood at 15.7% year-over-year in December 2025 – a significant decline from the 30%+ peak recorded in mid-2024. However, aggregate inflation masks substantial variation across expenditure categories, with food prices and transport costs exerting disproportionate pressure on household budgets, particularly for low-income families.
CPI Breakdown by Category
| Category | Weight in CPI (approx.) | YoY Inflation (Dec 2025 est.) | Trend |
|---|---|---|---|
| Food and non-alcoholic beverages | 45-50% | 18-22% | Declining but above headline |
| Transport | 10-12% | 12-15% | Easing with fuel subsidy adjustments |
| Housing, water, energy | 8-10% | 10-14% | Moderate, utility tariff-linked |
| Clothing and footwear | 5-7% | 12-16% | Import-price driven |
| Health | 3-5% | 10-14% | Stable, FX-linked for pharmaceuticals |
| Education | 3-4% | 8-12% | Below headline |
| Other goods and services | 15-20% | 12-16% | Mixed |
Food Inflation: The Dominant Driver
Food and non-alcoholic beverages carry the heaviest weight in Angola’s CPI basket – approximately 45-50%, reflecting the consumption patterns of a country where the median household spends the majority of income on food. Food inflation consistently runs above headline CPI for several structural reasons:
- Import dependence: Angola imports approximately 80% of its food, exposing domestic prices to USD/AOA exchange rate movements, global commodity prices, and supply chain disruptions
- Logistics bottlenecks: Poor road infrastructure between ports and interior provinces adds significant transport margins to food costs
- Agricultural underproduction: Domestic agriculture (22.1% of GDP) operates well below potential, unable to substitute for imports
- Market concentration: Limited competition in wholesale food distribution allows pricing power among intermediaries
The BNA’s rate-cutting cycle has limited direct impact on food inflation, which is driven primarily by supply-side factors rather than demand-pull dynamics.
Transport Costs
Transport inflation is closely linked to government fuel subsidy policy. Angola has been gradually reducing fuel subsidies as part of fiscal consolidation efforts, leading to periodic price adjustments that feed through to transport costs and, indirectly, to the prices of all goods that require distribution.
The phased approach to subsidy removal – rather than a one-time elimination – reflects the government’s awareness that rapid fuel price increases could trigger social unrest in a country with youth unemployment above 40% and significant income inequality.
Housing and Energy
Housing cost inflation is driven by:
- Utility tariff adjustments (electricity, water) as the government moves toward cost-reflective pricing
- Rent inflation in Luanda, where housing supply has not kept pace with urbanization
- Construction material costs, which are partially import-dependent and therefore FX-sensitive
Energy prices are a component of both direct CPI (household electricity and gas) and indirect inflation through production costs across all sectors.
Core vs Headline Inflation
Excluding food and energy – the most volatile components – core inflation in Angola runs approximately 3-5 percentage points below headline. This spread highlights the supply-side nature of Angola’s inflation challenge: monetary policy tightening through higher BNA rates is effective at containing demand-driven inflation but has limited influence over import prices, food supply, and administered tariffs.
Disinflation Path and Risks
The decline from 30%+ to 15.7% reflects:
- Relative FX stability (USD/AOA near 914.60), reducing import cost pass-through
- Base effects from the sharp price increases of early-to-mid 2024
- Tighter monetary policy dampening credit-financed demand
- Global food and energy price moderation
Risks to the disinflation trajectory include further fuel subsidy reductions, kwanza depreciation pressure if oil prices decline, global food commodity shocks, and adverse weather affecting domestic agricultural production.
Outlook
The EIU and IMF project inflation to decline toward 12-13% by end-2026, consistent with the BNA’s easing cycle. However, the composition of disinflation matters: sustained improvement in household welfare requires food inflation to converge toward headline, which in turn requires structural investment in domestic agriculture, logistics, and trade infrastructure.