Economists have disclosed that the Inflation in Sudan has risen to one of the highest levels in the world, and the country risks slipping into hyperinflation unless it gets its budget deficit and money supply under control.
According to Reuters, the runaway prices have worsened an economic crisis for millions of ordinary Sudanese and imperiled a political transition under a military-civilian power-sharing deal.
The government has run up enormous budget deficits by subsidizing the cost of fuel, then financed the deficits by printing money.
This has debased the currency, weakening it against other currencies and driving inflation up to an annual 230% in October, according to the state statistics bureau.
The skyrocketing prices have led many consumers to spend their salaries quickly, particularly on durable items that hold their value.
Idrees Abdelmoniem, who works in marketing at an engineering company in Khartoum, said he had snapped up car spare parts and furniture but was not as quick with food and drink, whose prices were not increasing as fast.
“If I have something I want to buy outside of the monthly house supplies, I buy it as soon as I get money, and I won’t even try to haggle because tomorrow it could be double the price,” he said.
Central bank figures show the scale of money printing by the authorities with the M2 money supply measure increasing by over 50% in the year to end-September. In September alone M2 rose by 7.13%.
Steve Hanke, a hyperinflation specialist at Johns Hopkins University, calculated that on a monthly basis, the inflation rate has accelerated to about 24% a month, dangerously high, but still below hyperinflation, generally defined as 50% a month.
He placed Sudan among the five countries with the highest inflation.
“It’s pretty scary,” he said, adding that it was hard to predict what direction inflation would go from here.
A U.S. decision to remove Sudan from its list of state sponsors of terrorism has provided little immediate relief from the economic crisis and the country has turned to the International Monetary Fund for help.
Sudan is counting on a reform programme drawn up with the lender to help get control of the deficit, exacerbated by decades of U.S. economic sanctions and by economic mismanagement under President Omar al-Bashir, who was ousted in a popular uprising in April of last year.
Gross domestic product (GDP) contracted by more than 2% in both 2018 and 2019 and is expected to shrink another 8.5% in 2020 after being walloped by the coronavirus pandemic, Sudan told the IMF in September.