Inflation Co-Movement Dynamics in SADC: A Continuous Wavelet Analysis

This study examines the co-movement dynamics of inflation rates among Southern African Development Community (SADC) member countries using continuous wavelet analysis. The main objective is to determine if and how inflation rates are synchronized across these countries, identifying potential structural frequency breaks, testing co-movement clusters, and assessing the influence of common factors. Monthly Consumer Price Index (CPI) data from 16 SADC countries, covering the period from January 1990 to October 2025, are analyzed using wavelet coherence and phase difference analysis. The results reveal marked heterogeneity in inflationary integration. A core of strong integration, including South Africa, Botswana, and Lesotho, exhibits high and persistent coherence across all frequencies, reflecting close synchronization of inflationary shocks. A group of moderately integrated countries, including Malawi and Zambia, shows significant coherence, primarily in the medium and long term. In contrast, Madagascar and Tanzania appear largely disconnected from regional inflationary dynamics, exhibiting weak and erratic coherence.