A provisional data from the Monetary Policy Committee of the Central Bank of The Gambia has attributed what it termed as the main driver of inflation to food prices which reportedly rose to 9.7 percent compared to 1.1 percent in July 2006.

According to the data the end-period inflation is forecast to decelerate to less than 5.0 percent by end-December 2007. However, there are believed to risks to the forecast particularly relating to volatile oil prices and rising global aggregate demand and their possible knock-on effects on general prices.

The data noted that non-food prices rose by a modest 2.5 percent from 2.1 percent in July 2006 while core inflation, excluding prices of energy and utilities as well as volatile food items rose from 1.8 percent in July 2007 to 6.4 percent in July 2007.

According to the data, inflationary pressures generally abated despite strong global growth and the consequent increase in aggregate demand with some emerging markets and developing countries starting to experience rising inflation driven by high energy and food prices.

Available inflation, the data further states, is yet to convincingly demonstrate a sustained moderation of inflationary pressures. End-period inflation, measured by the national consumer prices index, accelerated from 1.5 percent in July 2006 to 6.3 percent at end-July 2007.

However, the current account deficit including official transfers is expected to narrow to D828.4 million compared to D1.3 billion in 2006, premised on strong exports, including re-exports, increased travel and communication income and decline in external payments.

The capital and financial account balance is projected to decline to a surplus of D1.69 billion in 2007 from D2.04 billion in 2006 reflecting decreased external borrowing.

Balance of payments data in the first quarter of 2007 indicate an overall deficit of D59.2 million with current deficit, including official transfers, estimated at D58.7 million and the capital and financial account deficit at D0.54 million.

As at August 24, 2007 gross official reserves amounted to D2.9 billion (US 120.5 million), equivalent to 5.0 months of import cover, the data disclosed.