Demographic shifts and inflation dynamics in African economies

This paper examines how demographic structure shapes inflation dynamics in African economies beyond the traditional Phillips Curve framework. Using panel data for African countries over 1995-2024 (with an estimation sample of 47), and System GMM estimation, we analyze how the shares of the youth and elderly populations interact with unemployment to influence inflation. The results show that a larger youth share significantly raises inflation, reflecting dependency-driven demand pressures, but this effect weakens when unemployment is high, indicating limited labor market absorption. In contrast, a larger share of the elderly is associated with lower inflation, while its interaction with unemployment is positive, suggesting greater price stickiness in aging societies. Overall, inflation in Africa reflects demographic-macroeconomic disequilibria rather than purely cyclical demand pressures. The findings imply that effective inflation management in Africa requires integrating demographic realities into macroeconomic policy, with emphasis on job creation in youthful economies and structural flexibility in aging contexts.