Inflation Rate Slightly Slides to 15.2pc

Headline inflation, which hit five years record high in February, slightly dips last month with 15.2pc rate, according to the latest consumer price index from Central Statistical Agency (CSA).

An indicator of the cost of living, headline inflation, has shown a 0.4 percentage points decline from the preceding month. This decline was mainly driven by a fall of food inflation, which has been increasing for the past year, to 19.9pc. In return, non-food inflation has spiked to 10pc.

The current political stability and the sufficient supply of basic consumer products were the major reason for the reduction of inflation growth rate, according to Kassahun Beyene, director of Inspection & Regulatory at the Addis Abeba Trade Bureau.

“Along sufficient supply in the market followed the political stability, the consumers’ associations have been supplying sugar and edible oil,” he said.

However, last month, the prices of major cereals showed a steady increase coupled with the price rise of pulses, vegetables and fruits rose to some extent, pushed the rate to 15.2pc, according to CSA’s report.

The general Consumer Price Index (CPI), an index of the variation of prices of retail goods, of 185.2pc, observed in March 2018, was higher than the corresponding 160.9 CPI seen in March last year.

The rise in the prices of Khat, clothing and footwear and housing repair and maintenance, is also another factor which led to the hike in the non-food inflation rate.

Wheat from the cereals and steel and corrugated iron sheets from the housing repair and maintenance were the items which fetched price increase last month among others.

The steel price has been skyrocketing since the announcement of the devaluation of Birr against the baskets of major foreign currencies and no wheat supply in the market, as the government is on the procurement process, were the major reasons for the price spikes, according to Kassahun.

The government targets to limit the headline inflation to single digits, however, the rate has been in the double digits since August 2017. It further showed a fast upsurge since October 2017, following the devaluation.

To drag the rate down, the government has formed different task forces which will work on conducting studies and recommend way outs. The main taskforce, which regularly holds a meeting every Monday, is composed of 11 officials from the Ministry of Trade, National Bank of Ethiopia, and the office of the Prime Minister.

Another committee is also operational having members from Trade Competition & Consumers Protection Authority along with the Addis Abeba Trade Bureau and the regional trade bureaus. It holds a regular monthly meeting for updates.

Such constant price rise could lead consumers to go for substitutions; they might shift consuming essential products, according to Atlaw Alemu (PhD), a university professor at College of Business & Economic of Addis Abeba University (AAU).

“This will lead the market to shrink, and finally, the economy will suffer,” he said.

The inflation rate averaged at 16.23pc from 2006 until 2018, reaching an all-time high of 64.2pc in July of 2008 and a record low of -4.1pc in September of 2009. Last year the government succeeded in keeping inflation rate in a single digit with less than eight percent on average.

Last month South Sudan had the highest inflation rate across the continent with 112pc while Somalia had the lowest with -3.6pc. The neighbouring country, Kenya, kept its inflationary pressure with a single digit of 4.8pc, according to


Published on Apr 06,2018 [ Vol 18 ,No 936]



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