CBG Flags Rising Inflation Amid Middle East Conflict, Maintains Policy Rate

By JarranewsTV Staff Reporter

It has been disclosed that the ongoing tensions involving the United States, Israel, and Iran are exerting pressure on the Gambian economy, contributing to rising inflation and increasing the cost of both food and non-food commodities across the country.

Speaking during the Monetary Policy Committee (MPC) press briefing held in Banjul on Thursday, the Central Bank Governor revealed that headline inflation climbed from 6.4 percent in January 2026 to 7.0 percent in April 2026.

According to the governor, the surge in inflation was largely driven by increases in the prices of essential goods and services, including meat, fish, fruits, nuts, transport fares, housing, utilities, and other service-related categories.

Food inflation also recorded a moderate rise from 6.2 percent in January to 6.7 percent in April 2026, while non-food inflation accelerated more sharply to 7.2 percent from 6.4 percent during the same period.

Governor Saidy further noted that underlying inflationary pressures have intensified significantly. Core 1 inflation, which excludes volatile energy prices, rose from 3.4 percent in January to 6.6 percent in April 2026. Core 2 inflation, which excludes both volatile food and energy prices, increased from 4.6 percent to 6.5 percent over the same period.

He explained that the figures indicate inflationary pressures are becoming increasingly broad-based, with The Gambia remaining vulnerable to imported inflation caused by higher fuel prices, transport costs and exchange rate pass-through effects.

Despite the growing inflationary concerns, the Monetary Policy Committee decided to maintain the policy rate at 14 percent. The required reserve ratio for commercial banks was also maintained at 13 percent, while the standing deposit facility rate remained at 5 percent and the standing lending facility at 15 percent.

Governor Saidy, however, expressed optimism that the inflation trend would be temporary and manageable, adding that a possible de-escalation of the conflict in the Middle East could help ease global price pressures.

On economic growth, the Central Bank projected real GDP growth at 5.7 percent for 2026, representing a downward revision of 0.5 percentage points due to the adverse effects of the Middle East conflict on the global economy.

The governor also highlighted growing external sector challenges, stating that The Gambia’s balance of payments position weakened during the first quarter of 2026 amid rising import demand and persistent global uncertainties surrounding trade and commodity prices.

According to the bank’s estimates, the current account deficit widened to US$20.83 million in the first quarter of 2026 compared to US$13.19 million recorded during the same period in 2025.

Similarly, the goods account deficit increased to US$284.37 million from US$248.07 million in the corresponding period last year, reflecting a 20.6 percent surge in total imports.

Meanwhile, the country’s domestic debt stock also recorded an increase. Governor Saidy disclosed that government domestic debt rose to D53.3 billion at the end of March 2026, representing 24 percent of GDP, compared to D51.99 billion or 23.4 percent of GDP during the same period in 2025.

He added that domestic debt remains heavily concentrated in short-term instruments, which account for 54.8 percent of the overall debt portfolio.