There is a question that Mauritian politics cannot answer honestly, because answering it honestly would require every government since independence to indict its own record. The question is this: why, in a country that has had fifty-eight years to build domestic food production, domestic energy capacity and a wage structure that grows faster than import prices, does inflation still arrive every few years like a foreign invasion, demanding emergency political response?
The answer is not complicated. Inflation in Mauritius is not primarily an economic event. It is a political one. And the response to it is not primarily economic either. It is a performance: a set of instruments deployed to make voters feel that something is being done, while the structural conditions that produced the inflation remain intact and are, in certain cases, actively protected by the same governments managing the crisis.
This article explains the mechanism. It uses the tools of political science, not economics alone, because the tools of economics describe what is happening to prices. The tools of political science explain who decided that it should happen this way, who benefits from it continuing, and what kind of political system makes this pattern not only possible but rational for everyone involved.
Before naming what has happened in Mauritius, it is necessary to name the theoretical framework being used. Mauritians are not taught political science at school. They are taught civics, which is a different thing. Civics describes how the system is supposed to work. Political science describes how it actually works. The difference matters enormously when the subject is inflation, because the official narrative of inflation management in Mauritius is always a civics story: the government acted, the subsidies protected the vulnerable, the prices were stabilised, the crisis was managed. The political science story is harder, dirtier and more accurate.
The theory of the electoral business cycle, developed by William Nordhaus in 1975, holds that governments systematically manipulate economic conditions before elections to maximise votes. In its classic form, governments expand spending and reduce visible prices in the period before an election, then allow the inflationary or fiscal consequences to emerge after polling day. The voter, observing only the pre-election relief, rewards the government. The post-election adjustment, when it arrives, is attributed to external forces.
In Mauritius: The pattern is visible across every government since 1976. Price freezes, subsidy expansions, social transfer announcements and minimum wage increases cluster in the six to twelve months before general elections with a consistency that cannot be attributed to coincidence. The 2019 and 2024 elections both saw pre-election announcements of expanded social transfers and stabilised consumer prices. The structural conditions producing the pressure were not addressed in either case.
Clientelism, analysed extensively by James Scott, Kitschelt and Wilkinson, describes a political system in which public resources are distributed not on the basis of universal entitlement or economic efficiency, but on the basis of political loyalty and electoral calculation. The subsidy, the transfer and the price intervention are not designed to correct a market failure. They are designed to reward constituencies, signal alignment with specific communities and build the networks of political obligation that win elections in ethnically or communally segmented societies.
In Mauritius: The structure of Mauritian electoral politics, in which communal identity has historically shaped both candidate selection and voter behaviour, makes clientelism a structurally rational strategy for every political actor. When inflation rises and the government introduces relief, the selection of which prices to control, which groups to compensate and which transfers to announce is not purely economic. It is a map of the governing coalition’s voter base. Rice and flour are subsidised because they are consumed by every community. LPG gas is subsidised for the same reason. But the deeper structural relief, the kind that would raise real wages permanently by building domestic productive capacity, is never the instrument chosen, because it cannot be targeted and it cannot be withdrawn.
Rentier state theory, developed by Hossein Mahdavy and extended by Hazem Beblawi, describes states that derive significant revenue from external rents rather than from taxing their own populations’ productive activity. In the classic Gulf model, the state uses oil revenues to fund subsidies that substitute for political accountability: the population receives cheap goods and services in exchange for acquiescence to the government’s political authority. The subsidy is the social contract. When rents decline, the bargain comes under pressure.
In Mauritius: Mauritius is not an oil state, but it has operated a modified version of the rentier bargain across its entire post-independence history. The external rents are the Sugar Protocol (1975–2006), the Multi-Fibre Arrangement (1970s–2005), offshore financial services routing and tourism foreign exchange. These external income streams have funded a subsidy architecture — the STC Price Stabilisation Account, fuel subsidies, rice and flour price controls, the CSG income allowance — that substitutes for the harder structural conversation about why wages have not kept pace with prices for fifty-eight years. The subsidy is the answer the state gives instead of the structural investment that would make the subsidy unnecessary.
Agenda control theory, developed from Bachrach and Baratz’s concept of the “second face of power,” holds that political power operates not only by winning decisions but by preventing certain questions from reaching the agenda at all. The most consequential form of political power is not the ability to decide between options. It is the ability to determine which options are considered legitimate in the first place.
In Mauritius: The structural causes of chronic inflation — energy import dependency at 90.9 percent, food import dependency at approximately 75 percent, a wage-setting mechanism that responds to political pressure rather than productivity, and a currency managed to protect export capital at the expense of import-dependent households — have never constituted the main agenda of Mauritian electoral politics. Every election since independence has been fought primarily on communal identity, personality politics and specific transfer announcements. The structural questions are perpetually deferred. This is not an accident. It is the second face of power operating exactly as Bachrach and Baratz described: the most important political decisions in Mauritius are the decisions that are never made.
The table below is not an economic curiosity. It is a political document. Every spike in the inflation column corresponds to a structural vulnerability that was visible before it materialised, was addressable through investment during the preceding period of relative stability and was instead managed through fiscal intervention that left the vulnerability intact for the next government to inherit. Read the pattern, not just the numbers.
| Era & Government | Peak Inflation | Cause | Political Response | Structural Fix? |
|---|---|---|---|---|
SSR / Labour 1968–1976 |
13.5% (1973) | First oil shock. 100% energy import dependency. | Fiscal absorption. EPZ expanded to generate FX. Subsidies on essentials. | No. Energy dependency unchanged. Sugar Protocol windfall spent on recurrent expenditure. |
SSR / Labour 1976–1982 |
42.0% (1980) | Second oil shock 1979. GDP contracted −10%. Fiscal deficit −9% of GDP. | Fuel subsidies. Price controls. Deficit spending. No adjustment to energy policy. | No. Same structural response as 1973. Vulnerability deepened. |
MMM-PSM / Jugnauth 1982–1983 |
15.0% (1982) | Inherited fiscal crisis. Attempted IMF-aligned austerity. Coalition collapsed in 10 months. | Partial structural adjustment attempted. Political cost: coalition fractured, Bérenger fired. | Partial. EPZ conditions tightened briefly. No energy investment. |
MSM / Jugnauth 1983–1995 |
14.0% (1989) | Import costs, rupee depreciation. MFA boom masking structural exposure. | Diversification into tourism and financial services. Subsidy architecture maintained. | Partial. New rent streams introduced. Structural food/energy vulnerability unchanged. |
Labour-MMM / Ramgoolam 1995–2000 |
9.5% (1996) | Import inflation, rupee weakness, global commodity cycle. | Subsidy expansion. Alliance collapsed in 1997. Bérenger fired again. | No. EPZ employment peaked. No investment in successor industries. |
MSM-MMM / Jugnauth-Bérenger 2000–2005 |
10.7% (2007 trajectory set) | MFA ended 2005. Sugar Protocol phasing out. Both structural cushions removed simultaneously. | Services sector expansion. Price Stabilisation Account formalised by STC. | Partial. Services diversification genuine. PSA institutionalised subsidy without structural change. |
Labour / Ramgoolam 2005–2014 |
10.7% (2007) | Global commodity inflation 2007–08. Oil and food price surge. | Social transfers expanded. CSG system began taking shape. STC used as fiscal instrument. | No. Subsidy debt compounded. Renewable energy plans announced, not implemented. |
MSM / Jugnauth (Pravind) 2014–2024 |
10.8% (2022) | Post-COVID supply disruption. Russia-Ukraine war. Rupee at historic lows. | STC PSA deployed. Fuel prices capped. Rs 3.7bn cross-subsidy FY2023. CSG expanded. MIC deployed. | No. Energy dependency unchanged. Real wages eroded 18.4% from 2022–2026. |
Labour-MMM / Ramgoolam 2024–present |
2.7% (March 2026) | Inherited primary fiscal deficit of 9.3% of GDP. Public debt 86.5% of GDP. Global commodity cycle easing. | Subsidy architecture maintained. India petroleum framework. Renewable pipeline of 405 MW announced. | Under assessment. 405 MW pipeline is the first genuine structural signal in decades. |
The average inflation rate in Mauritius from 1964 to 2025 was 7.3 percent per year. An item that cost 100 rupees in 1964 costs 6,642 rupees today. That is not a market outcome. It is the cumulative price of fifty-eight years of political decisions made in place of structural ones.
The most important single instrument of political inflation management in Mauritius is the Price Stabilisation Account, operated by the State Trading Corporation. To understand how it works is to understand the entire architecture of managed inflation in this country. And to understand that architecture is to understand why the population absorbs the cost while the structure that produces the cost is never touched.
The STC is a parastatal body wholly owned by the Government of Mauritius. Its mandate is to import and distribute essential commodities: petroleum products, liquefied petroleum gas, rice and flour. Petroleum prices at the pump are determined not by the global market directly but by the Petroleum Pricing Committee, an independent body that reviews world prices against the Price Stabilisation Account balance and sets the retail price accordingly. When global oil prices rise, the PSA absorbs the difference between the world price and the capped retail price, running a deficit that is eventually recovered through a PSA levy added to future pump prices. When global prices fall, the PSA accumulates a surplus that is used to offset future shocks.
This mechanism, presented as a technical price-smoothing tool, is in fact a political instrument of the first order. In the financial year ended June 2023, the STC collected MUR 3.7 billion from the price structures of Mogas and Gas Oil to subsidise LPG, flour and rice below cost. The corporation ended that year with a deficit of MUR 622.9 million. In plain language: Mauritian motorists and commercial operators were taxed at the pump to fund below-market food and cooking gas prices. The instrument was not designed by economists. It was designed by politicians who understood that the visibility of food and cooking gas prices is what determines how inflation feels to the majority of households, regardless of what the CPI says.
Step one — the shock arrives: Global oil prices spike, as they did in 1973, 1979, 2007–08 and 2022. Import costs for fuel, food and raw materials all rise simultaneously. The CPI begins rising. Household purchasing power begins falling. Political pressure begins building.
Step two — the political calculus: The government faces a choice. It can allow market prices to transmit to consumers, which triggers visible public anger, or it can use the STC and the PSA to absorb the shock, keeping pump prices below market and subsidising staples. The second option generates political credit immediately. The first generates political cost immediately. No government facing an election within eighteen months chooses the first option.
Step three — the PSA deficit builds: The gap between the world price and the politically capped retail price accumulates in the PSA. The STC runs a deficit. The government eventually injects funds or allows a PSA levy to recover costs. The recovery happens after the election. The mechanism is transparent in its accounting and invisible in its political logic to most of the population.
Step four — the structural cause remains: The 90.9 percent energy import dependency that made the shock possible is not touched. The 75 percent food import dependency is not touched. The managed rupee depreciation that amplifies every imported price shock is not reversed. The subsidy is withdrawn when the global commodity cycle eases, the PSA is refilled, and the system waits for the next shock to perform the same sequence again.
The critical point: This is not a failure of economic policy. It is a success of political policy. Every government that has used this mechanism has survived the inflation it did not address structurally. The instrument works for the government. It does not work for the population.
The question of who benefits from the structural arrangements that produce chronic inflation in Mauritius is not a question that Mauritian journalism has pursued with the rigour it deserves. The answer requires naming the actors, the mechanisms and the political relationships that connect them. This section names them.
The hotel and tourism industry benefits from the managed weak rupee. The Bank of Mauritius operates what it describes as a managed float, but the structural energy import dependency of 90.9 percent ensures a permanent downward pressure on the rupee because it creates a permanent structural demand for US dollars and euros to pay petroleum suppliers. When the rupee weakens, hotel revenues earned in euros and dollars convert to more rupees. Hotel profit margins in rupee terms expand. The worker paid in rupees finds that every imported good costs more. The managed weak rupee is a transfer mechanism from workers to capital owners. It operates through the exchange rate rather than through legislation, which makes it invisible to most of the population and unreported by most of the press.
The Franco-Mauritian landowning and hotel elite benefits from the absence of domestic food production. If Mauritius had invested the Sugar Protocol windfall between 1975 and 2006 in domestic food production infrastructure, as multiple advisory bodies recommended at the time, the food import dependency of approximately 75 percent would be lower today. Lower food import dependency means lower food inflation exposure. It also means lower demand for subsidies. The structural food dependency is not an accident of geography. It is a consequence of the decision, made at independence and never reversed, to preserve the estate land ownership structure rather than redistribute it toward domestic food production. The families who own the estates benefit from the continuation of that structure.
The political class of every party benefits from the subsidy architecture. The subsidy is not a failure of governance. It is a tool of governance. Every party in power has used it for the same reason: it is the fastest, most visible and most politically reliable mechanism for demonstrating that the government is on the population’s side. The subsidy does not require changing anything structural. It requires only deploying state resources to cap a visible price. The political credit is immediate. The fiscal cost is deferred, managed through the PSA deficit, eventually recovered through post-election levies, and attributed to external forces when it arrives.
The IMF audits the outcome but cannot name the cause. The IMF’s 2024 Article IV Consultation correctly identifies that Mauritius’s fiscal buffers were eroded during the pandemic, that public debt at 81 percent of GDP in June 2023 is at dangerous levels for a small island developing state, and that the transfer programmes require reform. What the IMF cannot say, and what its mandate under Article IV Section 3(b) explicitly prohibits it from saying, is that the fiscal position is the consequence of fifty-eight years of political decisions to manage inflation through subsidy rather than address it through structural investment. The Fund is the right auditor for the wrong question.
No government in Mauritius has ever been voted out of office for failing to build a solar grid. Every government that has withdrawn a subsidy before an election has faced the political consequences immediately. The incentive structure is explicit. The population absorbs the cost. The structure is never changed.
The 2022–2024 inflation episode is the most recent and the most clearly documented instance of political inflation management in Mauritius. The sequence is worth reconstructing precisely because it happened in public, was reported on in fragments, and has never been assembled into the complete political account it constitutes.
In 2022, Mauritius recorded annual inflation of 10.77 percent, confirmed by World Bank data. This was the highest rate since the early 2000s and was driven by a combination of post-COVID supply chain disruption, the Russia-Ukraine war’s impact on global fuel and food commodity prices, and the structural rupee depreciation that had been accelerating since 2019. For an economy importing 90.9 percent of its primary energy and approximately 75 percent of its food, the transmission from global commodity prices to domestic retail prices was both immediate and severe.
The Jugnauth government’s response was the textbook political management playbook. The STC Price Stabilisation Account was activated to absorb the gap between world oil prices and capped retail prices. Rice and flour were sold below cost, with the subsidy funded from the fuel price structure: in FY2023, MUR 3.7 billion was collected from petrol and diesel price components to cover the LPG, flour and rice subsidy, confirmed by the STC Annual Report for the financial year ended June 2023. The CSG income allowance was expanded. The minimum wage was raised. In the September 2023 PPC review, when the world price implied a larger increase than politically acceptable, the Gas Oil increase was capped at 10 percent against the implied 17.6 percent, creating a loss of Rs 3.61 per litre that was absorbed by the PSA.
By 2023, annual inflation had eased to 7.05 percent as global commodity prices cooled. By March 2026, it stood at 2.7 percent, a one-year low. The government of the day declared the inflation episode managed. The structural conditions that made the episode possible remained exactly where they were when the episode began. The performance was complete. The structure was untouched.
What the episode cost: public debt reached 86.5 percent of GDP against a statutory ceiling of 60 percent. The primary fiscal deficit inherited by the incoming Ramgoolam government in late 2024 was 9.3 percent of GDP. Real wages had eroded an estimated 18.4 percent from 2022 to 2026. The population absorbed the inflation that the subsidy did not prevent and the fiscal cost of the subsidy that partially mitigated it. The structural beneficiaries of the arrangements that produced the vulnerability absorbed nothing.
The April 2026 announcement by Prime Minister Ramgoolam, made after the India–Mauritius framework meeting with Minister Jaishankar, of a 405 MW renewable energy pipeline is the first genuinely structural signal in Mauritian energy policy in decades. It deserves to be assessed seriously rather than dismissed as political theatre, precisely because the distinction between structural intent and political performance matters enormously for what follows.
A 405 MW renewable pipeline, if implemented at the scale and timeline implied, would meaningfully reduce Mauritius’s energy import dependency. Current total electricity generation capacity is approximately 700 MW. Adding 405 MW of predominantly solar and wind generation would, depending on capacity factors, reduce fossil fuel import requirements for electricity generation by a substantial proportion. The transmission to domestic inflation would be real: lower energy import bills mean lower structural dollar demand, which means less downward pressure on the rupee, which means lower import price transmission to consumer goods across the board.
But the pipeline announcement also needs to be read through the lens of the political science frameworks introduced at the start of this article. SAJ’s bagasse cogeneration policy of the 1980s succeeded because it aligned the elite’s self-interest with the national interest, giving the sugar estates a new revenue stream that happened to serve energy sovereignty. The solar pipeline requires the same political architecture. Hotel and estate land, existing grid connections, IPP contracts priced to match fossil fuel generation costs: if the pipeline is structured this way, it has a genuine chance of implementation. If it is structured as a state-led programme that requires the elite to absorb costs rather than gain revenues, the political economy of implementation will be far more difficult than the announcement suggests.
The current government inherits the most constrained fiscal position in Mauritian post-independence history. A primary fiscal deficit of 9.3 percent of GDP and public debt of 86.5 percent leave almost no room for the kind of state-led structural investment that would be required to change the conditions producing chronic inflation. This is the deepest political economy trap in Mauritius. The subsidy consumed the fiscal room that structural investment would have required. The structural investment was never made. The subsidy became more necessary as the structural vulnerability deepened. And now the fiscal room to escape the trap is the smallest it has ever been, at precisely the moment when the escape would be most valuable.
Is Mauritius managing inflation politically rather than economically? The question answers itself. Every government since independence has made the same choice, in the same conditions, using the same instruments, for the same political reasons. The subsidy, the price cap, the transfer and the pre-election relief package are not economic tools deployed in service of economic objectives. They are political tools deployed in service of electoral survival, and they work. No Mauritian government has lost an election because it failed to build a solar grid or invest the Sugar Protocol windfall in technical institutes. Several have come close to losing elections after raising pump prices. The incentive structure is explicit.
What Mauritians do not know, because political science is not taught in schools and because the journalism that should explain it has chosen sensation over structure, is that the cost of this political rationality is the cumulative inflation record: 7.3 percent average per year from 1964 to 2025, 42 percent in a single year in 1980, 10.8 percent in 2022, and a fiscal position that is now so constrained that the structural investment which could break the cycle is the one thing the state can least afford to make. The subsidy is not the solution to inflation in Mauritius. It is the condition for its perpetuation.
The 405 MW renewable pipeline is the first genuine structural signal in decades. Whether it represents the beginning of a different political economy, or whether it is the most recent performance in a fifty-eight-year repertoire, will be determined not by what is announced but by what is built, by whom, on what terms and at whose expense.
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