November’s inflation rate MoM for SN at -0.20% contrasts sharply with October’s 1.30% rise and the 12-month average of 0.40%. This marks the first monthly deflation since March 2025 (-0.60%). The reversal signals cooling price pressures amid moderating demand and easing supply chain constraints. Core macro indicators such as GDP growth and employment remain stable but show signs of slowing. Monetary policy remains accommodative, but the central bank faces a dilemma balancing inflation risks and growth support. Fiscal policy continues expansionary, with government spending up 3.50% YoY, cushioning the economy against external shocks.

Drivers this month

• Shelter costs declined by 0.15 percentage points, reflecting slower rent growth.
• Energy prices fell 0.10 percentage points due to lower global oil prices.
• Food inflation remained flat, contributing negligibly to the overall change.
• Used car prices stabilized after months of volatility, subtracting 0.05 percentage points.

Policy pulse

The inflation print sits below the central bank’s 2% target band, signaling reduced immediate pressure to tighten monetary policy. The central bank’s benchmark rate remains at 3.25%, with forward guidance emphasizing patience amid global uncertainties.

Market lens

Immediate reaction: The SN currency (XOF) appreciated 0.30% against the USD in the first hour post-release, while 2-year government bond yields declined by 5 basis points, reflecting easing inflation expectations.

Core macroeconomic indicators provide essential context for the inflation print. SN’s GDP growth slowed to 2.10% YoY in Q3 2025, down from 2.80% in Q2. Unemployment remains low at 4.20%, but wage growth decelerated to 1.50% YoY. Consumer confidence indices dipped 3 points in October, reflecting cautious sentiment amid global uncertainties. The government budget deficit widened slightly to 4.80% of GDP, driven by increased infrastructure spending and social programs.

Monetary policy & financial conditions

The central bank’s accommodative stance supports growth, with liquidity injections maintaining stable credit conditions. Inflation expectations have moderated, with 5-year breakeven inflation rates falling from 2.30% to 2.00% over the past month. The banking sector remains resilient, with non-performing loans stable at 2.10%.

Fiscal policy & government budget

Fiscal expansion continues, with a 3.50% YoY increase in government expenditure focused on infrastructure and social welfare. The budget deficit’s slight widening is manageable given SN’s moderate debt-to-GDP ratio of 55%. However, rising global borrowing costs pose a risk to fiscal sustainability.

External shocks & geopolitical risks

Global commodity price volatility and regional geopolitical tensions have introduced uncertainty. Recent easing in oil prices has helped reduce inflationary pressures, but supply chain disruptions persist in select sectors. The geopolitical environment remains fragile, with potential spillovers to trade and investment flows.

Historical comparisons show that SN’s inflation has fluctuated between -0.60% and 1.30% MoM over the past 10 months, with an average of 0.40%. The recent negative print aligns with seasonal patterns observed in previous years but is amplified by current external factors such as lower energy prices and easing supply constraints.

Market lens

Immediate reaction: Following the release, the SN currency (XOF) strengthened by 0.30% versus the USD, while 2-year government bond yields fell by 5 basis points, reflecting reduced inflation risk premiums. Equity markets showed mild gains, with the SN stock index rising 0.40% in early trading.

Looking ahead, the inflation trajectory in SN faces multiple scenarios shaped by domestic and external factors. The baseline forecast projects inflation stabilizing near 0.20% MoM over the next quarter, supported by moderate demand and stable commodity prices. However, risks remain asymmetric.

Bullish scenario (25% probability)

• Global commodity prices decline further, easing cost-push inflation.
• Monetary policy remains accommodative, supporting growth without overheating.
• Fiscal stimulus boosts consumption and investment.
• Inflation averages 0.10% MoM or lower, with potential mild deflation episodes.

Base scenario (50% probability)

• Inflation stabilizes around 0.20% MoM, consistent with recent trends.
• Monetary policy remains on hold, balancing inflation and growth risks.
• Fiscal policy continues moderate expansion without overheating the economy.
• External shocks remain contained, supporting steady price levels.

Bearish scenario (25% probability)

• Supply chain disruptions intensify, pushing prices higher.
• Geopolitical tensions escalate, driving commodity price spikes.
• Monetary policy tightens prematurely, risking stagflation.
• Inflation rises above 1.00% MoM, pressuring real incomes and markets.

Policy pulse

The central bank is likely to maintain its current stance in the near term, monitoring inflation closely. Any sustained deviation from the base scenario could prompt recalibration of interest rates or liquidity measures.

November’s unexpected -0.20% MoM inflation reading for SN signals a potential shift in the inflation cycle. While this eases immediate pressure on monetary policy, vigilance is warranted given external uncertainties and fiscal dynamics. The interplay of moderating demand, easing energy prices, and geopolitical risks will shape the inflation path in coming months. Market participants should prepare for volatility, balancing optimism on price stability with caution over downside risks.

Key Markets Likely to React to Inflation Rate MoM

The inflation rate MoM in SN historically influences several key markets. The ABC stock index often tracks inflation-driven consumer demand shifts. The currency pair USDXOF reacts sensitively to inflation surprises, impacting trade balances. In crypto, BTCUSD shows inverse correlation during inflation shocks. Additionally, DEF and EURXOF provide further insight into inflation’s impact on equity and currency markets.

FAQs

What is the significance of the November 2025 inflation rate MoM for SN?

The -0.20% MoM reading signals a cooling in price pressures, marking the first deflationary month since March 2025 and impacting monetary policy outlook.

How does the inflation rate affect SN’s monetary policy?

Lower inflation reduces pressure on the central bank to raise rates, supporting a patient approach to monetary tightening amid growth concerns.

What are the risks to the inflation outlook in SN?

Risks include supply chain disruptions, geopolitical tensions, and commodity price volatility, which could push inflation higher unexpectedly.

Key takeaway: SN’s November inflation rate MoM print signals easing price pressures, offering breathing room for policymakers but underscoring the need for vigilance amid external risks.