Abstract:
The negative impact of high inflation on the economic health of country has pushed different
countries to come up with economic strategies that might keep inflation rate at a low level.
However, the positive trend in inflation rate continues to defy solution in Sub-Saharan Africa in
recent years; leaving Sub-Saharan countries the option of building up strong predictive skills as
they deal with the challenges of economic manipulations of indicators influencing inflation. In
East Africa Community, where there is a suggestion of using one currency, inflation might be a
big threat, accented with South Sudan a new member of East Africa which is among countries
with the highest inflation rate in the world, as of May, 2016. In this research, we assess the
interdependency of consumer price inflation rate of elderly members of East African
Community, to look at the credibility of one currency in the area in terms of consumer price
inflation. We also make an econometric modeling analysis that provides a guideline in consumer
price inflation prediction of East Africa Community Member states. The prediction performance
of Ordinal Least Square multiple linear model, Support Vector Machine, K Nearest Neighbor,
Penalized Linear Models and Autoregressive Integrated Moving Average have been compared to
assess the more reliable model in the area. The results of the study show that there is a strong
interdependence of consumer price inflation rate in old members of East Africa Community, and
there is no difference in the levels of inflation in these countries, giving an edge for one currency
suggestion in the area. For the prediction side, Support Vector Machine turned out to be the best
model outperforming all other models on accurate prediction in the whole area
