Tunisia - The Executive Board of the Central Bank of Tunisia (BCT) decided to keep the bank's key interest rate unchanged at 8%, according to a statement issued after its meeting on Wednesday.

The BCT Board added that it believes inflation prospects remain subject to upward risks, emphasising the need to continue supporting the downward trend of inflation in the coming period.

During its meeting, the BCT Board reviewed recent economic developments and the trajectory of inflation.

Indeed, according to the latest forecasts from the Central Bank, the inflation rate maintained its downward trend, reaching 6.2% in December 2024, compared to 6.6% in the previous month and 8.1% a year earlier. On an annual basis, the inflation rate decreased from 9.3% in 2023 to 7% in 2024.

Core inflation, which excludes fresh food products and regulated-price items, reached 5.5%, compared to 5.8% in November 2024 and 8.5% in the previous year, according to the same source.

This slowdown is primarily attributed to the notable decline in inflation for processed food products with free prices, which stood at 1.1% in December 2024, compared to 2.4% in the previous month and 14.5% a year earlier. This development reflects the impact of the nearly generalied decline in global prices of basic food commodities, particularly olive oil (-9.8% compared to -3.1% in November 2024).

On the other hand, the sustained rise in prices of fresh food products, observed since September 2024, slightly eased in December 2024.

Indeed, the inflation rate for fresh food products decreased from 14.1% in November 2024 to 12.6% the following month, thanks to the easing in the pace of price increases for fresh vegetables (14.2% in December 2024 compared to 23.5 percent in the previous month). In contrast, pressures on prices of other fresh food products, such as poultry and red meat, persisted.

Regarding the external sector, the BCT Board noted the continued strong performance of the services balance and factor income, which supported the current account and mitigated the impact of the widening trade deficit.

The current account deficit narrowed to -2,748 million dinars (or -1.7% of GDP) at the end of 2024, compared to -3,484 million dinars (or -2.3% of GDP) in 2023.

Excluding energy, the current account would have recorded a surplus of +8,122 million dinars in 2024, compared to +6,182 million dinars in 2023.

The improvement in the external sector's position enabled the rebuilding of foreign exchange reserves, which reached 27,332 million dinars (equivalent to 121 days of imports) at the end of December 2024, before declining to 23,266 million dinars (equivalent to 103 days of imports) as of February 4, 2025, mainly due to the repayment of a significant amount for external public debt service.

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