EMANES Working Paper No 70

The objective of this study is to explain the dynamics of inflation in Senegal. To this end, a Structural VAR model on monthly data covering the period January 2015 – July 2022 was used.

The econometric model includes various national macroeconomic variables (industrial production index, money supply, harmonised consumer price index) and foreign variables (oil price, imported product price index, Dollar/FCFA exchange rate). The results show that, in the short term, world prices are the main determinants of the general price level in Senegal. A 1% rise in imported product prices would generate a 0.55% rise in the HICP the following month. Furthermore, in the short term, over 75% of price fluctuations are explained by their own past variations (inertia effect), and between 21.5% and 25.2% by the prices of imported products.

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