Reflecting the modest growth in the monetary aggregates coupled with the strengthening of the Dalasi and the expected good harvest, inflation is forecast to remain in single digits, reports from the Central Bank of The Gambia reveal.

The report, which forms part of the latest data issued by the Monetary Policy Committee of the bank, also indicates that uncertainty about developments in food and energy prices have further increased inflationary expectations.

However, the report noted, there are risks to the outlook relating to the persistent surge in global energy and food prices.

According to the report, end-period inflation, measured by the National Consumer Price Index, was 3.8% at end-July 2008 compared to 6.3% in July 2007.

“Annual average inflation rate was 4.3% relative to 3.3% a year earlier. Food and non-food price inflation fell to 5.3% and 1.9% compared to 9.7% and 2.5% respectively at end-July 2007.

“Core inflation, which excludes prices of energy and volatile food items, decelerated from 6.4% in July 2007 to 3.2% at end-July 2008,” the report added.

Inflation, the report went on, rose from 2.2% in June to 3.8% in July 2008.

The Monetary Policy Committee report further indicates that commercial banks loans and advances to major economic sectors increased to D3.0 billion in June 2008, or 33.2% from a year ago.

“Loans and advances to all the major economic sectors increased except in agriculture which decreased by 50.4% to D157.7 million. Credit to the fishing industry, building and construction, transportation and distributive trade increased by 6.6%, 95.4%, 78.5% and 37.8% respectively,” the reports noted.

Taking the above mentioned factors into consideration, including the risk to the inflation outlook, the report indicates, the Monetary Policy Committee has decided to maintain the Rediscount rate, the policy rate, at 15.0%.

“The MPC would continue to monitor changes in economic conditions and respond appropriately in order to discharge its mandate to maintain price stability,” the report concluded.