Ethiopia’s escalating inflation rate raises concerns
Ethiopia’s Central Statistics Authority has announced that the Horn of Africa country registered a 9 percent increase in inflation between the months of April and May 2001. The inflation surge has been blamed on rising food prices in the country.
From 25.6 per cent in April, Ethiopia’s inflation rate hit 34.7 in May 2011 to record a 9 per cent increase in just one month. And according to a report, released on Monday by country’s statistics authority, the current inflation is mostly due to rising food princes – which accounted for a 40 percent plus increase in the price of grain in May as against 32.2 percent in April 2011.
The latest figures come at the heels of last week’s prediction by the IMF, in a report released in May, that the country’s overall economic growth for the 2011/2012 fiscal year, which had been set at 11 percent by government, would slow to about 6 percent. A rising inflation that, according to the international lender, could be a challenge to Ethiopia’s economic growth.
Conversely, Ethiopian Minister of Finance and Economic Development, Sofian Ahmed, in an address to the country’s Parliament on Tuesday, June 14, reiterated the growth target of 11 per cent in the 2011/2012 fiscal year whilst declaring that the government will continue to take precautionary measures to control Ethiopia’s rising inflation.
As part of the inflationary control measures, government moved to set price caps for 18 basic commodities about three months ago.
But, last week another government decision, which called for the lifting of the price caps for a number of the 18 items, including meat and beer, saw an acute rise in the price of several basic commodities with some jumping by almost 25 percent within a day.
And many believe the price hikes, what Ahmed says remains a challenge for the majority of Ethiopians, will continue boosting the country’s inflation rates.
“The prices of many commodities are increasing on daily basis. But whilst we are confused as to what to do, the government is telling us that there is economic growth,” complained Teshome Belete, a resident of Addis Ababa.
Belete says that food prices, including banana and orange, skyrocketed shortly after the government announced that it was lifting the price caps: “Look at the price of banana and orange… they have risen by over 10 per cent within a single day. What does it mean? Economic growth?,” asked Belete.
Although government price caps on sugar, edible oil and other commodities still remain their scarcity recently prompted Ethiopian Prime Minister, Meles Zenawi, to promise huge imports of edible oil to meet local demand.
Whilst the Ethiopian government is distributing a litre of edible oil for around one Euro against the local market price of about €3, most residents say essential commodities have disappeared from the local market.