Morocco’s inflation rate climbed to 0.9% year-on-year in March, up from -0.6% in February, according to the High Commission for Planning (HCP), marking the first positive reading since October 2025 and the highest since March last year.
The shift signals a decisive break from one of the country’s longest recent deflationary periods, reversing a trend that had provided temporary relief to consumers but also reflected weak price momentum in the broader economy.
Food prices, the most sensitive component for households, rose 0.6% annually, while non-food inflation accelerated to 1.1%, underscoring the breadth of the upward pressure.
“The Consumer Price Index rose by 0.9% in March 2026, driven by increases in the food price index (0.6%) and the non-food price index (1.1%),” the HCP said. “For non-food products, variations range from a decrease of 0.4% for ‘Leisure and Culture’ to an increase of 3.5% for Miscellaneous Goods and Services.”
On a monthly basis, the acceleration was more pronounced. Prices jumped 1.2% between February and March, one of the steepest month-on-month increases in over two years, pointing to a sudden external shock rather than a gradual domestic build-up.
That shock has been largely imported. Morocco, which relies entirely on oil imports, is particularly vulnerable to global energy market disruptions. The escalation of tensions in the Middle East has pushed oil prices above $120 per barrel, feeding directly into domestic fuel and transport costs.
Fuel prices surged 10.7% in March alone, while the broader transport category rose 3.0% on the month. On an annual basis, transport inflation edged up to 0.8%, highlighting the early stages of what could become a more entrenched trend if energy costs remain elevated.
The rebound comes after four consecutive months of deflation: -0.3% in November and December, -0.8% in January, and -0.6% in February. For 2025 overall, inflation averaged just 0.8%, one of the lowest levels since the pandemic.
March’s data, however, suggests that calm may have been temporary.
The overall consumer price index rose to 121.0 in March from 119.6 in February. The food sub-index climbed from 130.2 to 132.7, while the non-food component increased from 112.7 to 113.4.
Despite the rebound, the first-quarter average index of 119.9 remained marginally below the 120.0 recorded a year earlier, indicating that, cumulatively, deflation has not yet fully reversed. But the direction is unmistakable.
Energy shock exposes structural vulnerabilities
Morocco’s exposure to global energy markets has once again come into sharp focus. With no domestic crude production, the country imports all its oil needs, leaving it highly sensitive to geopolitical disruptions.
The recent surge in global oil prices has already translated into a roughly 13% increase in fuel pump prices since the onset of supply disruptions linked to Middle East tensions. This has fed directly into the 10.7% monthly jump in fuel costs recorded in March.
Government intervention has helped cushion the blow. Economy and Finance Minister Nadia Fettah Alaoui told parliament that authorities have been allocating MAD 1.6 billion ($160 million) monthly since March to mitigate the impact of rising prices.
She said the government is handling the situation “with a social sense and financial and economic responsibility”, adding: “We cannot isolate our prices from global reality.”
Morocco phased out fuel subsidies in 2014, although it continues to support butane gas, leaving households more exposed to fluctuations in global oil markets compared with previous decades.
The impact has not been evenly distributed across the country. Smaller cities have borne the brunt of the price increases, with Guelmim and Al-Hoceima recording the sharpest monthly rises at 2.7%. Errachidia followed with 1.8%, and Agadir with 1.6%.
In contrast, larger urban centres showed more muted increases. Casablanca recorded a 1.0% rise, while Rabat and Kenitra each saw 0.9%. Fez and Settat posted smaller gains of 0.7%, suggesting that larger, more diversified economies may be better able to absorb shocks.
Policy outlook shifts as inflation returns
Despite the headline increase, underlying inflation pressures remain subdued. Core inflation — which excludes volatile items — rose just 0.1% month-on-month and fell 0.6% compared with March 2025.
This divergence indicates that the current spike is being driven primarily by external factors, particularly energy prices, rather than strong domestic demand.
For policymakers, that distinction matters.
Bank Al-Maghrib held its benchmark interest rate at 2.25% in late March, citing steady growth in non-agricultural sectors, moderate inflation expectations, and heightened geopolitical uncertainty.
The central bank projects inflation to remain relatively contained at 0.8% in 2026, then rise to 1.4% in 2027. These forecasts suggest that, absent further external shocks, price pressures could stabilise.
Growth prospects remain comparatively robust. The International Monetary Fund expects Morocco’s economy to expand by 4.4%, while Bank Al-Maghrib is more optimistic, forecasting growth of 5.6%.
The government is also stepping up investment spending, particularly in transport infrastructure, logistics modernisation, public services, and agriculture, to sustain economic momentum and attract private capital.
Yet the return of inflation complicates the policy outlook.
With deflation now behind it, expectations of a potential interest rate cut later this year are likely to fade. The persistence of energy-driven price pressures could force policymakers to maintain a cautious stance, even as they seek to support growth.
For households, the implications are more immediate. After months of falling prices, the renewed rise in living costs — particularly for food and fuel — is likely to strain budgets and test the effectiveness of government support measures.
