Cost of Living Slightly Falls in August


August’s inflation growth rate fell slightly by 0.6 percentage points




Headline inflation, an indicator of the cost of living, dipped to an annual rate of 13.4pc last month, according to the latest report from the Central Statistical Agency.

In August, food inflation stood at 16pc, showing a 0.7 percentage point decrease from the previous month. Non-food inflation also dropped to 10.3pc from 10.9pc in July.

“Though inflation has increased, its growth rate is slower compared to the previous month,” said Alemayehu Teferi, director of household surveys and price statistics at the Agency.

The headline inflation was 14pc in July. And last month’s growth rate has slightly fallen by 0.6 percentage points, as the latest consumer price index showed.

The rise in inflation of non-food items is mainly due to the increase in the prices of housing repairs and maintenance, especially corrugated iron sheets and door sets;  clothing and footwear; cement and energy; household goods and furnishings; transport and healthcare supplies, according to the report.

Price of pulses, cereals, fruits, vegetables, and spices increased from the previous month, while prices of some food items, such as bread, meat, milk, cheese, eggs, butter, vegetables, sugar, honey and chocolate, showed a slight decline in August, the report indicates.

Though the decline is insignificant, there could be factors, according to Atlaw Alemu (PhD), a university professor at the College of Business & Economics at Addis Abeba University.

A positive expectation from the suppliers and the traders is the major factor in the decline, according to Atlaw.

“The relative political and economic stability of the country could have a positive impact in limiting further price hikes of both food and non-food items,” he said.

In addition to the approaching Belgseason [autumn], the harvest season is another factor, he adds.

“Supply usually increases when the harvest season approaches,” he said. “So both suppliers and traders anticipate that prices could go cold when new supply enters the market. This will automatically make them sell their products at fair prices.”

Though the rate has shown a slight decline from the previous month, it is still higher than what the government plans. For the current fiscal year, the Ministry of Finance & Economic Cooperation has made a target of keeping the inflationary pressure to a single digit. Yet the rate has swung between 14pc and 13.4pc in the first two months of the new fiscal year.

The government’s plan to keep inflation to single digits failed during the last fiscal year where it registered at 13pc, the highest in four years. For the past fiscal year, the targeted rate of inflation was eight percent. From 2006 to 2018, the inflation rate averaged 16.23pc, reaching a record high of 64.2pc in July of 2008 and the lowest rate of -4.1pc in September of 2009.

Even missing the target, Ethiopia has one of the lowest inflation rates in the East Africa region, but it is higher compared to Kenya, who kept its inflation rate in single digits at 4.04pc, according to tradingeconomics.com,a New York-based online economic indexes indicator.



By FASIKA TADESSE
FORTUNE STAFF WRITER

Published on Sep 08,2018 [ Vol 19 ,No 958]


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