Libre Tribune: Inflation in Morocco, between official figures and market reality

The Sidi Moussa market in Salé,

Par El Mostapha BAHRI, Economist

In recent years, discussions in Morocco have increasingly focused on prices, in other words on inflation. This economic phenomenon, which results in a generalized and continuous increase in the prices of goods and services, has a direct impact on the purchasing power of consumers. The question that arises today is whether inflation in Morocco has become structural, as the High Commissioner for Planning declared in March 2023: “inflation has become a structural fact of the Moroccan economy. , that we must get used to living with”[1].

Since the start of 2024, inflation continues to exert tangible pressure on real market prices, creating challenges not only for consumers, but also for businesses and policymakers. Although official statistics indicate a downward trend in inflation, a notable gap remains between these figures and market reality. Officially, “inflation in Morocco has followed a downward trend, driven by the reduction in the prices of food products at volatile prices. After reaching 6.1% in 2023, it is expected to settle at 1.3% in 2024, before rising slightly to 2.5% in 2025. Core inflation, which excludes volatile products, increases is stabilized around 2% and should remain close to this rate over the next eight quarters”[2].

However, on the ground, the prices of basic necessities, which constitute the bulk of the household basket, have become inaccessible for a large part of the population. This observation does not call into question the official figures, but highlights the fact that several products and services taken into account in the calculation of the price index do not concern citizens living on the SMIG or lower incomes. Would it not be more relevant to design a price index adapted to the most disadvantaged households?

On September 24, 2024, the Board of Bank Al-Maghrib held its third quarterly meeting and decided to maintain its key rate at 2.75%. This decision is based on a context of moderate inflation and the uncertainties weighing on the economic outlook. However, the Central Bank remains vigilant regarding the evolution of the situation, particularly on an international scale, and says it is ready to adjust its monetary policy if necessary.[3].

In my opinion, this decision is wise. However, monetary policy alone is not enough to curb price increases in an environment where prices are liberalized. The problem does not lie in this price liberalization policy.

Indeed, price liberalization, which consists of letting market forces freely determine the prices of goods and services, has several advantages. These are the improvement of economic efficiency, the stimulation of competition, the encouragement of innovation, the mitigation of market distortions, the attraction of investments, the reduction of costly state interventions and finally the improvement of market transparency. These advantages must allow, among other things, resource use, increased productivity, price stability and improved social well-being.

However, for many suppliers of goods and services, price liberalization is often interpreted as complete freedom, which sometimes leads to a chaotic situation. It is crucial to remember that price freedom does not mean the absence of intervention from the authorities, who have a role to play in regulating the markets. This includes constant monitoring to ensure fair competition, as well as corrective measures to address malfunctions and protect consumers. Unfortunately, the interventions of the Competition Council, the administration in charge of prices, field investigators, and even consumer associations have had no perceptible effect for citizens. The latter believe they are left to their fate in the face of dishonest suppliers and dominating intermediaries who control the market, which raises the following questions:

• Do current competition and consumer protection laws allow for effective market surveillance, intervention in the event of malfunctions, as well as appropriate sanctions when necessary?
• Do the administration and bodies responsible for applying these laws have the qualified human resources, equipment and skills necessary to ensure their effective implementation?
• Are consumer associations capable of fulfilling their mission of information and awareness, assistance and advice, representation and defense of consumer interests, as well as promotion of the quality of products and services?

In conclusion, inflation in Morocco raises major challenges for consumers (notably the low-income category, even the middle class), businesses and political decision-makers, particularly in the context of price liberalization. If official data announces a fall in inflation, the reality on the markets shows persistent pressure, particularly on the poorest households. Monetary policy, although essential, is not sufficient on its own to correct these imbalances. Effective regulation, rigorous price monitoring and strengthening of consumer protection systems are essential to ensure a fairer market and preserve citizens’ purchasing power.

[1] https://fr.belpresse.com/you 27 March 2023

[2] https://www.challenge.ma/from September 24, 2024.

[3] https://www.challenge.ma/. On. Cit.