The issue of inflation in South Sudan can’t be resolved overnight
3 min readBy Paul Duwar Bak, Kampala, Uganda
March 26, 2016 (SSB) —- The free market that was decreed by the minister of finance and the governor of the central bank of south Sudan cannot be the solution to the rising inflation in the country. The issue of who is right or wrong is not what south Sudanese should be looking at, it is important to understand the economics of what caused the inflation and raised the prices for staple foods, fuel and transport rose among others and how to cure it.
Currently, inflation in south Sudan has hit a double digit, south Sudan bureau of statistic reported earlier that the inflation rate for the year end December 2015 rose to 11. % from 6.4%. This is the highest inflation rate since south Sudan got it/ her independence 2011.
Definitely the government is doing its best to curb the inflation, but putting unnecessary pressure on the government that inflation be curbed is unrealistic.
Inflation is not like a thief who can be chased and physically caught and caged. It will take a few more days or months before the government can control policies that can curb inflation. The overall inflation measures is the result of millions of pricing decision made by businesses, large and small.
The calculation of retail price index although extremely through, is always subject to error and omission.
Furthermore, the nature of the inflation process makes it very difficult to forecast, even when inflationary conditions in the economy appears too benign.
External economic shocks can make forecast in accurate, for example a sharp jump in the world oil prices or deep falls in global share prices, and both have big feedback effects through the economic system.
The exchange rate might also fluctuate leading to volatility in the prices of imported goods and services.
Inflation’s effects on an economy are various and can be simultaneously positive and negative.
Negative effects of inflation include a decrease in the real value of money and other monetary items and uncertainty over future inflation may discourage investment and savings.
High inflation may lead to shortages of goods if consumers begin boarding out of concern that prices will increase.
Positive effects increase ensuring central banks can adjust nominal interest rates and encouraging investment in non-monetary capital projects.
The control of inflation has become one of the dominant objectives of the government economic policy in many countries including south Sudan. The various methods are usually grouped under three heads: monetary measures, fiscal measures and other measures.
Inflation should be fought by the government using short, medium and long –term policies.
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